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DEFENSE WORKING CAPITAL FUND

DEFENSE-WIDE FISCAL YEAR (FY) FY 2016

BUDGET ESTIMATES

OPERATING AND CAPITAL BUDGETS

FEBRUARY 2015

CONGRESSIONAL DATA

DEFENSE-WIDE WORKING CAPITAL FUND FISCAL YEAR (FY) 2016 BUDGET ESTIMATES

FEBRUARY 2015

DEFENSE-WIDE SUMMARY

The Defense-Wide Working Capital Fund (DWWCF) consists of six activity groups. The Defense Logistics Agency (DLA) operates three of these activity groups, the Defense Information Systems Agency (DISA) operates two activity groups, and the Defense Finance and Accounting Service (DFAS) operates one activity group.

The DFAS was formed in January 1991 from the Military Services finance and accounting functions. The DFAS leads the Department of Defense (DoD) in finance and accounting by ensuring the delivery of efficient, exceptional quality pay and financial information.

The DISA was reorganized in 1991 from the former Defense Communications Agency. The DISA engineers and provides command and control capabilities and enterprise infrastructure to continuously operate and assure a global net-centric enterprise in direct support to joint warfighters, National level leaders, and other mission and coalition partners across the full spectrum of operations. The DLA, formed in the early 1960s, operates the Supply Chain Management (SCM), Energy Management, and Document Services activity groups. The DLA SCM manages materiel from initial acquisition, to storage and distribution, and then finally to reutilization or disposal. The DLA Energy Management provides comprehensive worldwide energy support for the military services and other authorized customers. The DLA Document Services provides time sensitive, competitively priced, and high quality printing and digital services. The DLA provides effective and efficient worldwide support to warfighters and our other customers.

DEFENSE-WIDE WORKING CAPITAL FUND CASH The table below displays the actual DWWCF cash balance at the end of FY 2014 and projected cash balances for year-end through FY 2016. 1These plans reflect a decrease of $1,616.9 million in cash from the beginning of FY 2014 thru FY 2016.

Dollars in Millions FY 2014 FY 2015 FY 2016

Beginning of Period, Cash 2,683.4 1,635.7 1,434.0 Disbursements 46,602.7 46,990.6 45,682.9 Collections 45,744.4 46,658.3 45,184.0 Net Outlays 858.3 332.3 498.9 Direct Appropriation

FY 2014 Received 46.4 FY 2015 Received

44.3

FY 2016 Request

45.1 Overseas Contingency Operations Appropriation 1

FY 2014 Received 131.7 FY 2015 Received

86.3

FY 2016 Request

86.3 Transfers -367.5 0.0 0.0 End of Period, Cash 1,635.7 1,434.0 1,066.5 FY 2014 Cash: The DWWCF Cash balance decreased $1,047.7 million due to net outlays of $858.3 million and transfers of $367.5 million out of the fund. This decrease was partially offset by direct appropriations of $178.1 million. The DWWCF appropriations included $46.4 million in direct appropriations for Reutilization, Transfer, and Disposal (RTD) costs and $131.7 million in Overseas Contingency Operations (OCO) appropriations. The DLA SCM activity received $46.7 million primarily for continuing operations at the six established DLA Disposition Services sites (four in Afghanistan, one in Kuwait, and one in Qatar). The DLA Energy Management activity received

1 "Because the Administration has not yet made final decisions about an enduring presence in Afghanistan after calendar year 2015, the Budget includes a placeholder for the Department of Defense's 2016 OCO funding. This number is a placeholder and appears solely for the purposes of estimating reimbursable rates and cash balances in DOD working capital fund activities. Once DOD's OCO needs for 2016 are determined, a budget amendment package will be transmitted subsequent to release of the Budget."1

$85.0 million for Fuel Transportation/Terminal Operations and Combat Fuel Losses. Transfers out were from the DLA Energy Management activity ($347.5 million) to the Operation and Maintenance, Defense Wide account, and from the DLA SCM activity ($20.0 million) to the Army Working Capital Fund (WCF) for Consumable Item Transfers (CIT). The Net Outlays were primarily due to the DLA SCM activity ($911.4 million). The DLA Energy Management activity outlayed $52.4 million. The FY 2014 ending cash balance was $1,635.7 million. FY 2015 Cash: The DWWCF expects to outlay $332.3 million due to the DLA SCM activity ($940.9 million), partially offset by a projected gain of $485.5 million in the DLA Energy Management activity. Projected Net Outlays for the DLA SCM activity are due to:

(1) audit readiness contracts (2) payments to the Military Services for Logistics

Reassignment of Items (F/A-18 and CIT) (3) disbursing for materiel with a long financial lead

time, which was obligated in a prior fiscal year (4) lower sales based on forecasted lower demand

The DLA Energy Management activity gain is from lower than budgeted refined product costs along with higher than budgeted sales in the first two months of the fiscal year. The DWWCF received $44.3 million in direct appropriations for RTD costs and $86.3 million in OCO funding. Of the $86.3 million received, the DLA Energy Management activity received $47.0 million for Fuel Transportation/Terminal Operations and Combat Fuel Losses; the DLA SCM activity received $39.3 million primarily for the DLA Disposition Services to support the drawdown of contingency operations in Afghanistan and also to support the Satellite Communications Services (SATCOM) for activities in Southwest Asia (SWA). The projected FY 2015 ending cash balance is $1,434.0 million. FY 2016 Cash: The DWWCF expects to outlay $498.9 million due to a projected loss in the DLA SCM activity ($564.6 million). The DLA Energy Management activity expects to outlay $7.8 million. Net Outlays for the DLA SCM activity are due to:

(1) lower sales projections and associated collections caused by a decreasing customer Operations Tempo

(2) disbursing for materiel with a long financial lead time for which obligations were made in a prior fiscal year (3) audit readiness contracts

The DWWCF requests $45.1 million in direct appropriations for RTD costs and $86.3 million in OCO funding2. Of the $86.3 million, the DLA Energy Management activity is requesting $47.0 million and the DLA SCM activity is requesting $39.3 million. The FY 2016 ending cash balance is projected to be $1,066.5 million.

2 "Because the Administration has not yet made final decisions about an enduring presence in Afghanistan after calendar year 2015, the Budget includes a placeholder for the Department of Defense's 2016 OCO funding. This number is a placeholder and appears solely for the purposes of estimating reimbursable rates and cash balances in DOD working capital fund activities. Once DOD's OCO needs for 2016 are determined, a budget amendment package will be transmitted subsequent to release of the Budget."2

FY 2014 FY 2015 FY 2016

1. New Orders:

a. Orders from DoD Components

Army 7,614.6 7,644.6 7,681.1

Operations & Maintenance 5,740.7 5,392.1 5,398.5

Research Development Testing & Evaluation 135.0 205.5 194.2

Procurement 331.9 545.5 584.0

Military Construction 3.0 5.7 4.9

Family Housing 2.3 40.3 35.2

Military Personnel 1,357.4 1,356.6 1,370.6

Other 44.3 98.9 93.7

Navy 6,808.3 6,658.8 6,319.5



Procurement 64.6 69.5 69.8



Military Personnel 404.2 399.2 404.9

Other 9.4 23.6 33.9

Air Force 8,754.1 8,517.3 8,181.3






Military Personnel 50.2 1,453.1 1,381.8

Other 26.3 65.6 63.0

Marine Corps 815.5 893.3 897.2

Operations & Maintenance 629.9 695.8 698.1






Other 0.0 14.2 13.2

Defense-Wide 4,127.9 4,695.7 5,102.0



Procurement 110.7 227.5 232.3




Other 2,096.4 2,079.0 2,107.7

(Dollars in Millions)

DEFENSE-WIDE WORKING CAPITAL FUND - TOTAL

SOURCE OF NEW ORDERS AND REVENUE

FISCAL YEAR (FY) 2016 PRESIDENT'S BUDGET SUBMISSION

FEBRUARY 2015

Fund-11 Source of Revenue

Other 196.8 213.6 265.2

Operations & Maintenance 195.6 212.8 264.4






Other 0.0 0.0 0.0

Total New Orders 28,317.2 28,623.3 28,446.3



Procurement 527.2 861.6 905.4



Military Personnel 1,987.0 3,382.0 3,332.9

Other 2,176.4 2,281.3 2,311.5

b. Orders from Other Fund Activity Groups 14,909.4 13,261.2 13,218.5

Army 3,053.9 2,610.6 2,627.4

Navy 3,345.1 2,991.8 2,928.6

Air Force 7,231.3 6,305.6 6,317.2

Marine Corp 1.3 1.6 1.5

Defense-Wide 1,277.8 1,351.6 1,343.8

c. Total DoD 43,226.6 41,884.5 41,664.8

d. Other Orders: 2,801.1 3,781.8 3,628.0

Trust Fund 23.7 26.4 26.9

Federal Agencies 831.3 1,462.0 1,401.8

Non Federal Agencies 614.7 884.0 838.5

Exchange Activities 0.7 1.2 2.5

Foreign Military Sales 1,330.7 1,408.2 1,358.3

2. Carry-In Orders 3,138.3 3,433.4 3,291.7

3. Total Gross Orders 49,166.0 49,099.7 48,584.5

4. Carry-Out Orders -3,433.4 -3,291.7 -3,197.8

5. Gross Sales 45,732.6 45,808.0 45,386.7

Disposition Services - Sales Proceeds 104.0 122.1 130.0

6. Credits & Allowances -684.4 -1,143.0 -1,073.0

7. Net Sales 45,152.2 44,787.1 44,443.7

8. Reimbursable Sales 762.2 912.8 896.5

9. Total Revenue 45,914.4 45,699.9 45,340.2

Fund-11 Source of Revenue

FY 2014 FY 2015 FY 2016

Revenue:

Gross Sales 44,804.5 44,700.0 44,305.2

Operations 44,695.0 44,555.7 44,165.2

Capital Surcharge (35.3) (6.7) (17.5)

Depreciation excluding Major Construction 144.8 151.0 157.5

Major Construction Depreciation 0.0 0.0 0.0

ADPE & Telecommunications Equipment 0.0 0.0 0.0

Other Income 1,950.2 2,295.5 2,264.3

Refunds/Discounts (-) (684.4) (1,143.0) (1,073.0)

Total Income 46,070.3 45,852.5 45,496.5

Expenses:

Cost of Materiel Sold from Inventory 31,849.9 29,076.6 27,833.0

Materiel-Related 0.0 0.0 0.0

Salaries and Wages:

Military Personnel Compensation & Benefits 67.0 66.9 68.1

Civilian Personnel Compensation & Benefits 3,610.7 3,798.2 3,845.3

Travel & Transportation of Personnel 38.2 54.9 54.7

Materials & Supplies (For Internal Oper) 73.2 117.2 123.2

Equipment 148.9 143.0 111.9

Other Purchases from Revolving Funds 769.3 844.6 1,010.7

Transportation of Things 633.9 890.7 903.5

Inventory Maintenance (32.2) 272.5 249.2

Depreciation - Capital 292.0 336.1 344.9

Printing & Reproduction 64.5 79.7 78.9

Advisory and Assistance Services 25.6 104.4 99.4

Rent, Communication, Utilities, & Misc. 2,146.1 2,129.9 2,147.7

Other Purchased Services 7,373.1 8,856.0 9,167.1

Total Expenses 47,060.2 46,770.7 46,037.6

Operating Result (989.9) (918.2) (541.1)

Less Capital Surcharge Reservation 35.3 6.7 17.5

Plus Passthroughs or Other Approp Affecting NOR 0.0 0.0 0.0

Other Adjustments Affecting NOR (769.4) 97.7 90.0

Net Operating Result (NOR) (1,724.0) (813.8) (433.6)

Prior Year Adjustments 0.0 0.0 0.0

Other Changes Affecting AOR (0.9) (98.7) 171.1

Prior Year AOR 2,438.8 722.0 (419.9)

Accumulated Operating Result (AOR) 713.9 (190.5) (682.4)

Non-Recoverable Adjustments Impacting AOR 7.9 (229.1) (110.2)

Accumulated Operating Results for Budget Purposes 721.8 (419.6) (792.6)


DEFENSE-WIDE WORKING CAPITAL FUND

SUMMARY

FISCAL YEAR (FY) 2016 PRESIDENT'S BUDGET SUBMISSION

REVENUE AND EXPENSES

FEBRUARY 2015

Fund-14 Revenue and Expenses

PART I: CONGRESSIONAL JUSTIFICATION PAGE

Section 1: DFAS Overview Page 1

Section 2: DFAS Operating Budget Fund 2 Changes in the Costs of Operation Page 5 Fund 11 Source of New Orders & Revenue Page 6 Fund 14 Revenue and Costs Page 8

Section 3: DFAS Capital Budget9A Activity Group Capital Investment Summary Page 99B Activity Group Capital Purchase Justification 9C Capital Budget Execution Page 15

Fiscal Year (FY) 2016 Budget Estimates

February 2015

TABLE OF CONTENTS

Defense Finance and Accounting Service

DEFENSE FINANCE AND ACCOUNTING SERVICE

OVERVIEW

As the world’s largest finance and accounting operation, the Defense Finance and Accounting Service (DFAS) leads the Department of Defense (DoD) in finance and accounting by delivering efficient, exceptional quality pay and financial information.

The DFAS works in partnership with defense agencies, military services, and combatant commands to provide timely business information to key decision-makers. Focusing on the finance and accounting needs of the military services, the DFAS allows the Warfighter to better concentrate on their mission. The DFAS is committed to performing timely finance and accounting services at the lowest cost, with a high degree of accuracy, utilizing electronic processes wherever possible. The DFAS provides a diverse set of accounting, finance, and technical services to customers to include:

Commercial Pay: The DFAS processes customer invoices in an efficient, accurate and timely manner. During FY 2014, the DFAS processed more than 11.5 million commercial invoices while reducing cost through increased use of electronic commerce (electronic receipt of contracts, invoices and receiving reports). This, along with other process improvements, has resulted in reduced cycle-time, fewer errors, and less rework enabling the DFAS to free up customer resources to support the warfighter.

Military/Civilian Pay Services: During FY 2014, the DFAS processed over 150 million pay transactions, disbursed over $572 billion to over 6.2 million customers, and managed more than $772 billion in the Military Retirement and Health Benefits Funds. The DFAS continuously enhances value to our customers by finding innovative ways to improve service and reduce costs. For example, military and civilian customers can access payroll information anywhere a secure internet connection is available. In addition, customers are able to enter time and attendance, process travel claims, expedite payment of claims, and receive electronic leave and earnings statements and W-2s online. Transitioning to an electronic environment has resulted in more efficient processes, broader and faster availability of data, and more functionality and hands-on control for our customers.

Accounting Operations Services: The DFAS accounted for 1,270 active DoD appropriations while maintaining 228.6 million general ledger accounts. Accounting Operations provides responsive and professional financial management, accounting, analysis, and consultation services with a consistent focus on helping the DoD and other customers become more audit ready every day.

1

Information Technology (IT) Services: Information technology is critical to the DFAS mission. The constantly changing technological environment necessitates continuous management focus on IT planning, development and maintenance of systems, and daily infrastructure operations. The DFAS technology services include planning, developing architectures, designing, building, operating, and maintaining essential telecommunications and computing infrastructure, as well as system development, maintenance, and customer support. The DFAS’s IT directorate takes the lead in advising and implementing the DFAS strategy to leverage the evolving technology that enables a framework of continuous improvement.

Budget Assumptions and Efficiencies

The DFAS aligned its budget assumptions and based its estimates on business events required to meet customer workload forecasts. As a working capital fund, the DFAS may adapt its execution plan in response to subsequent changes in customer requirements.

The DFAS shaped the FY 2016 President’s Budget with a focus on maintaining quality service to customers at the lowest possible cost while maintaining sufficient resources to support ongoing operations and capital investment. The DFAS budget incorporates the following assumptions, efficiencies, and strategies. DFAS is focused on:

• Leveraging efficiencies and cost reductions to meet new workload demandswithout increasing cost or end strength.

• Ensuring the highest level of quality and customer service by analyzing andevaluating our operational performance against maturing metrics andbenchmarks.

• Maintaining a high level of accounting support to the DFAS customers withcontinued focus on Enterprise Resource Planning (ERP) and Audit Readiness.

• Supporting customer audit assertion and audit execution by providing clientliaison support, educational programs, contracting and accounting support, andsystem upgrades and enhancements as part of a dedicated infrastructure.

• Generating long term cost savings and continuity of quality by in-sourcingmission related functions when beneficial.

• Increasing cost efficiencies by consolidating servers, reducing database sizes,strategically managing hardware replacement schedules, and in-sourcingexpertise.

2

• Enhancing the effectiveness of our systems environment by partnering withcustomers to accelerate legacy system retirements, seamlessly transitioningreplacement systems, and developing and implementing system upgrades.

• Reducing the cost of postage, printing, and labor through paperless and “handsfree” services.

• Continuing to mature unit cost tracking and analysis to aid the DFAS inevaluating and validating customer billing rates throughout the year. This willallow the DFAS to better assess potential future rate adjustments as well asmore closely monitor the status of budgetary resources.

Budget Summary

The following tables provide the DFAS Defense Working Capital Fund (DWCF) estimates for Cost, Revenue, and Personnel levels.

FY 2015 FY 2016

Revenue $1,312.9 $1,414.7 $1,412.5 Cost of Operations $1,294.7 $1,385.7 $1,371.2 Operating Results $18.2 $29.0 $41.3

Unfunded Depreciation, Non-DWCF acquired PP&E $11.3 $11.2 Recoverable Net Operating Results (NOR) $29.4 $40.2 $52.5

Accumulated Operating Results (AOR) – Beginning $-41.1 $-11.7 $28.6 Adjustments 0.0 0.0 -$81.1 AOR - Final $-11.7 $28.6 $0.0

Revenue and Cost (Dollars in Millions)

FY 2014

$11.2

FY 2014 FY 2015 FY 2016

Personnel

Civilian FTEs 11,181 11,569 11,560 Civilian End Strength 11,227 11,492 11,533 Military End Strength 29 29 29

3

In FY 2014, customer orders did not materialize at budgeted levels. The DFAS adapted its execution to the lower funding level and ended FY 2014 with a positive NOR, although AOR remained negative by $11.7 million. The DFAS set its FY 2016 rates to provide sufficient cash and resources to support ongoing operations and to mitigate risk from potential workload fluctuations.

The DFAS President’s Budget reflects a focus on embracing new technology, use of more efficient systems, and reduced reliance upon contractor staff. The DFAS anticipates further reductions and cost savings to customers through the Future Years Defense Program (FYDP) as a result of increased usage of e-commerce for payment processing, additional troop drawdowns resulting in lower workload, and reductions and efficiencies driven by internally identified innovations and process improvements.

The DFAS capital program shows a decline in FY 2016, because one-time efforts undertaken in FY 2014 and FY 2015 will not be seen in FY 2016.

The ADPE and Telecommunications Equipment program remains consistent from FY 2014 through FY 2016 supporting Enterprise Local Area Network, Teleservices and Security requirements across the Agency. In FY 2016, funding for these programs will level out based on the cost saving initiatives implemented in prior years.

The Software program increases from FY 2014 to FY 2015 as the Agency continues to implement Standard Financial Information Structure/Standard Line of Accounting (SFIS/SLOA) efforts started in FY 2014. Additionally in FY 2015, DFAS is beginning the upgrade of the Electronic Business program, elevating this system to an Enterprise Resource Planning system. This effort will continue in FY 2016 while the remainder of the software budget will decline to baseline levels.

The Minor Construction program remains constant in FY 2014 and FY 2015 with projects at the Columbus site in FY 2014 and the Rome and Limestone site in FY 2015. In FY 2016, projects are expected at Columbus, Limestone and Indianapolis to increase security and safety of DFAS personnel.

FY 2014 FY 2015 FY 2016

Total Obligations $29.6 $32.7 $25.5 Total Capital Outlays $23.8 $31.2 $30.7

Capital Investment Program (Dollars in Millions)

4

Exhibit Fund- 2 Changes in the Costs of Operation

FY 2014 Actuals $1,294.7

Pricing Adjustment:FY 2015 Civilian Pay Raise $6.9Annualization Prior Year Pay Raise 2.3Inflation Adjustment 5.9

Program Changes:Military Personnel Compensation (2.8)Civilian Personnel Compensation 45.1Travel & Transportation of Personnel 2.1Material & Supplies 0.7Equipment 1.1Other Purchases from Revolving Funds (7.6)Transportation of Things 0.1Depreciation 3.1Printing & Reproduction 0.2Advisory & Assistance Services 9.4Rent, Communications, Utilities and Misc. Charges 2.8Other Purchased Service 21.7

FY 2015 PB 2015 Estimate: $1,385.7

Pricing Adjustment:FY 2016 Civilian Pay Raise $9.6Annualization Prior Year Pay Raise 2.4Inflation Adjustment 7.0

Program Changes:Military Personnel Compensation 1.2Civilian Personnel Compensation 12.4Travel & Transportation of Personnel (1.2)Material & Supplies (0.2)Equipment (0.1)Other Purchases from Revolving Funds (7.3)Transportation of Things 0.0Depreciation (7.8)Printing & Reproduction (0.3)Advisory & Assistance Services (5.1)Rent, Communications, Utilities and Misc. Charges (2.4)Other Purchased Service (22.6)

FY 2016 PB 2016 Estimate: $1,371.2

Fiscal Year (FY) 2016 Budget EstimatesChanges in the Costs of Operation

Defense Finance and Accounting ServiceFebruary 2015


5

Fiscal Year (FY) 2016 Budget EstimatesSources of New Orders and Revenue


Exhibit Fund 11 Sources of New Orders and Revenue

1. New Orders FY 2014 FY 2015 FY 2016a. Orders from DoD Components:

APPN Client Customer

Total Capital DW Defense Agency Defense Finance and Accounting Service 5.8 6.1 9.3

Total Family Housing Army Army Family Housing 0.0 0.0 0.8

O&M Air Force Core Work 248.3 279.0 256.3O&M Army Core Work 493.4 505.8 517.2O&M Marine Corps Core Work 44.8 52.0 50.1O&M Navy Core Work 201.6 224.1 227.9O&M DW Defense Agency Business Transformation Agency 0.5 0.0 0.0O&M DW Defense Agency US Court of Appeals for the Armed Forces 0.0 0.0 0.0O&M DW Defense Agency Chemical Biological Defense Program 0.0 0.0 0.0O&M DW Defense Agency Defense Acquisition University 0.8 0.9 0.9O&M DW Defense Agency Defense Contract Audit Agency 4.2 4.3 4.6O&M DW Defense Agency Defense Contract Management Activity 5.9 6.7 6.6O&M DW Defense Agency Defense Health Program 29.2 33.6 35.9O&M DW Defense Agency Defense Human Resources Activity 1.7 2.3 2.5O&M DW Defense Agency Defense Intelligence Agency 0.5 1.1 1.2O&M DW Defense Agency Defense Information Systems Agency 11.0 11.2 11.7O&M DW Defense Agency Defense Logistics Agency 8.2 9.4 6.2O&M DW Defense Agency Defense Legal Services Agency 0.2 0.3 0.3O&M DW Defense Agency Defense Media Activity 1.2 1.1 1.2O&M DW Defense Agency Department of Defense Prisoner of War/Missing In Action Office 0.2 0.3 0.3O&M DW Defense Agency Department of Defense Comptroller 1.5 1.3 1.4O&M DW Defense Agency Department of Defense Education Activity 6.2 7.5 8.9O&M DW Defense Agency Department of Defense Inspector General 1.8 1.9 3.6O&M DW Defense Agency Defense Security Cooperation Agency 22.9 26.6 27.8O&M DW Defense Agency Defense Security Service 1.4 0.8 1.1O&M DW Defense Agency Defense Threat Reduction Agency 2.3 3.5 2.4O&M DW Defense Agency Defense Technology Security Administration 0.1 0.4 0.4O&M DW Defense Agency Joint Chief of Staff, Office 0.7 0.7 0.9O&M DW Defense Agency Military Housing Privatization Initiative 0.6 0.8 0.6O&M DW Defense Agency National Defense University 0.5 0.7 0.7O&M DW Defense Agency National Geospatial-Intelligence Agency 3.8 4.0 3.6O&M DW Defense Agency National Security Agency 1.2 1.5 1.5O&M DW Defense Agency Office of Economic Adjustment 0.3 0.3 0.4O&M DW Defense Agency Pentagon Force Protection Agency 0.2 0.3 0.3O&M DW Defense Agency Department of Defense, Office of 0.2 0.6 0.4O&M DW Defense Agency Special Operations Command 4.1 4.3 5.5O&M DW Defense Agency Washington Headquarters Service 4.5 4.3 4.4

Total O&M 1,104.3 1,191.7 1,186.6

RDT&E Army Army 0.0 0.0 0.0RDT&E Navy Navy 1.9 1.8 1.8RDT&E Air Force Air Force 0.0 0.0 0.0RDT&E DW Defense Agency Business Transformation Agency 0.0 0.0 0.0RDT&E DW Defense Agency Chemical Biological Defense Program 0.5 0.0 0.9RDT&E DW Defense Agency Center for Countermeasures 0.1 0.1 0.1RDT&E DW Defense Agency Defense Advanced Research Projects Agency 2.2 2.4 3.0RDT&E DW Defense Agency Defense Logistics Agency 1.3 0.0 0.0RDT&E DW Defense Agency Defense Technical Information Center 3.0 3.7 3.2RDT&E DW Defense Agency Missile Defense Agency 3.3 4.6 4.7RDT&E DW Defense Agency Washington Headquarters Service 0.0 0.0 0.0

Total RDT&E 12.4 12.6 13.8

a. Total Orders from DoD Components: 1,122.5 1,210.4 1,210.4

6

Fiscal Year (FY) 2016 Budget EstimatesSources of New Orders and Revenue


Exhibit Fund 11 Sources of New Orders and Revenue

FY 2014 FY 2015 FY 2016b. Orders from Other Fund Activity Groups

APPN Client CustomerWCF Air Force 7.3 8.7 7.5WCF Army 13.3 16.0 10.7WCF Marine Corps 1.3 1.6 1.5WCF Navy 36.8 35.3 39.9WCF DW Defense Agency Defense Commissary Agency 16.1 18.3 17.3WCF DW Defense Agency Defense Information Systems Agency-DITCO 9.0 9.7 10.6WCF DW Defense Agency Defense Logistics Agency 50.5 67.0 60.4WCF DW Defense Agency Military Traffic Management Command 2.2 3.4 2.3WCF DW Defense Agency TRANSCOM 6.7 7.1 8.5WCF DW Defense Agency Defense Technical Information Center 0.0 0.0 0.0WCF DW Defense Agency Defense Technology Security Administration 0.3 0.0 0.0WCF DW Defense Agency Washington Headquarters Service 0.0 0.0 0.0WCF DW Defense Agency Pentagon Force Protection Agency 0.0 0.0 0.0

b. Total Orders from Other Fund Activity Groups 143.4 167.1 158.8

c. Total DoD 1,265.9 1,377.6 1,369.2

d. Other OrdersUS Dept of Treasury US Dept of Treasury 0.8 0.0 0.0US Dept of Veteran Affairs US Dept of Veteran Affairs 32.1 28.6 35.5US Dept of Energy US Dept of Energy 1.0 1.0 1.2US Dept of Health Human Services US Dept of Health Human Services 7.7 3.3 0.1US Corps of Engineers US Corps of Engineers 3.3 4.0 4.0Department of Homeland Security Department of Homeland Security 0.0 0.0 0.1Director of National Intelligence Director of National Intelligence 0.3 0.0 1.9Environmental Protection Agency Environmental Protection Agency 1.0 0.0 0.0US Coast Guard US Coast Guard 0.0 0.0 0.0Executive Office of the President Executive Office of the President 0.1 0.0 0.2Broadcast Board of Govenors Broadcast Board of Govenors 0.1 0.1 0.2Foreign Military Sales Foreign Military Sales 0.0 0.0 0.0Commercial (Citi, EDS, etc) Commercial 0.5 0.0 0.1

d. Total Other Orders 47.0 37.1 43.3

1. Total New Orders 1,312.9 1,414.7 1,412.5

2. Carry-In Orders 0.0 0.0 0.0


4. Carry-Out Orders 0.0 0.0 0.0

5. Gross Sales 1,312.9 1,414.7 1,412.5

6. Credit 0.0 0.0 0.0

7. Net Sales 1,312.9 1,414.7 1,412.5

7

FY2014 FY2015 FY2016

Revenue Gross Sales

Operations 1,268.0 1,377.2 1,382.1Depreciation except Major Construction 44.9 37.5 30.4

Other Income 0.0 0.0 0.0Customer Bill Adjustment 0.0 0.0 0.0

Refunds/Discounts (-) 0.0 0.0 0.0

Total Income: 1,312.9 1,414.7 1,412.5

Costs Salaries and Wages:

Military Personnel Compensation & Benefits 5.6 2.8 4.1Civilian Personnel Compensation & Benefits 920.7 975.0 999.4

Travel & Transportation of Personnel 4.1 6.3 5.2 Materials & Supplies (Internal Operations) 1.7 2.4 2.3 Equipment 6.0 7.2 7.2 Other Purchases from Revolving Funds 123.3 117.6 112.3 Transportation of Things 0.5 0.6 0.6 Depreciation - Capital 44.9 48.7 41.7 Printing and Reproduction 4.0 4.3 4.1 Advisory and Assistance Services 19.0 28.4 23.8 Rent, Communications, Utilities, & Misc. Charges 34.6 38.0 36.3 Other Purchased Services 130.3 154.4 134.3

Total Expenses 1,294.7 1,385.7 1,371.2

Operating Result 18.2 29.0 41.3

Depreciation, Non-DWCF Acquired PP&E 11.2 11.3 11.2 Adjustments to NOR 0.0 0.0 0.0

Net Operating Result 29.4 40.2 52.5

PY AOR -41.1 -11.7 28.6AOR Adjustments - - -81.1

Accumulated Operating Results -11.7 28.6 0

Exhibit Fund-14 Revenue and Costs

Fiscal Year (FY) 2016 Budget EstimatesRevenue and Costs



8

DEFENSE INFORMATION SYSTEMS AGENCY FISCAL YEAR (FY) 2016 BUDGET ESTIMATES

DEFENSE WORKING CAPITAL FUND INFORMATION SERVICES

February 2015

DEPARTMENT OF DEFENSE DEFENSE INFORMATION SYSTEMS AGENCY

Defense Working Capital Fund

Information Services Activity Group: Overview

FISCAL YEAR (FY) 2016 BUDGET ESTIMATES

The Defense Information Systems Agency (DISA) is a combat support agency responsible for planning, engineering, acquiring, fielding, and supporting global net-centric solutions to serve the needs of the President, Vice President, the Secretary of Defense, and other Department of Defense (DoD) Components. Its goal is to enable information dominance and support the war fighters and those who support them.

Defense Information Systems Agency Information Services Activity Group

Key Budget Data

($ in millions) FY 2014* FY 2015 FY 2016 Revenue $7,119.7 $8,249.7 $8,825.3 Cost $7,002.8 $8,184.1 $8,720.7 Net Operating Result (NOR) $116.9 $65.5 $104.6 Other Factors Affecting NOR** $0.0 $0.0 ($62.0) Prior Year Accumulated Operating Results (AOR) $114.2 $231.2 $67.6 Ending AOR $231.2 $296.7 $110.2 Retained AOR $0.0 $229.1 $110.2 Total Retained AOR*** $0.0 $229.1 $339.3 AOR for Budget Purposes $231.2 $67.6 $0.0 Capital Budget $53.6 $88.0 $48.8 Civilian Work Years 3,349 3,541 3,579 Military End Strength 79 88 75

*The table above provides a summary of the financial accounts and personnel levels reflected in this budget request for the Information Services activity group. FY 2014 data are actual results. ** JRSS sustainment added to DSS only recognized revenue not cost. Cost will be recognized at a later date. ***Retention of AOR through FY 2016 in order to recapitalize the fund and provide increased operational flexibility. Please note data in all tables may not add due to rounding. The DoD Joint Information Environment (JIE) is designed to create an enterprise information environment that optimizes use of the DoD IT assets, converging communications, computing, and enterprise services into a single joint platform that can be leveraged for all Department missions. These efforts improve mission effectiveness, reduce total cost of ownership, reduce

the attack surface of our networks, and enable DISA’s mission partners to more efficiently access the information resources of the enterprise to perform their missions from any authorized IT device anywhere in the world. DISA continues its efforts towards realization of an integrated Department-wide implementation of the JIE through development, integration, and synchronization of JIE technical plans, programs and capabilities. DISA is uniquely positioned to provide the kind of streamlined, rationalized enterprise solutions the Department is looking for to effect IT transformation. DISA owns/operates enterprise and cloud-capable Defense Enterprise Computing Centers (DECCs), the world-wide Defense Information Systems Network (DISN), and the Defense IT Contracting Organization (DITCO). The DECCs routinely see workload increases – this trend will increase as major new initiatives begin to fully impact the Department. As part of the Department’s transition to the Joint Information Environment (JIE), eight of DISA’s DECCs have been identified as Continental United States (CONUS) Core Data Centers (CDCs), and Defense Enterprise Email (DEE) has been identified as a DoD Enterprise Service. DISA also anticipates continuation of partnerships with other federal agencies. The DoD/VA Integrated Electronic Health Record (iEHR) agreement to host all medical records in the DECCs and the requirement for DoD to provide Public Key Infrastructure (PKI) services to other federal agencies on a reimbursable basis are examples. We continue to move forward on enterprise email for Army, Air Force, Joint Staff, and others; we have completed an agreement with Army to consolidate optical networks in Europe with other geographical regions to follow, and we continue to operate an Enterprise License Agreement (ELA) line of business with a low fee of 0.5 percent. This budget proposes significant savings and efficiencies that will allow for reduced costs across the Department. By incorporating these efficiencies and prior year operating results, DISA is able to offer Enterprise and IT services at a reduced rate while still addressing increasing demand for services and providing recapitalization of the fund. The DISA operates the Information Services Activity Group within the Defense-Wide Working Capital Fund (DWCF). DISA DWCF consists of two components, the Computing Services (CS) and the Telecommunications Services/Enterprise Acquisition Services (TS/EAS) Groups. As our business areas continue to evolve, they are interdependent cost centers of an integrated technical architecture. As a result, this legacy division of the Information Services Activity Group is moving toward full integration into a single business entity pending replacement of legacy systems. For rate setting purposes, DISA assesses profit/loss factors at the agency level.

Rate Changes for Major Programs FY 2016 Rate/Fee Percent Change DISN Subscription Services Share Price $137,500 -9.3% Standard Contracting Fee 2.5% 0.00% Enterprise License Agreement Contracting Fee 0.5% 0.00% Computing Services Composite Change - -10.01%


Defense Working Capital Fund Computing Services


The Computing Services business area provides the Defense Enterprise Computing Centers (DECCs) operations, which provide mainframe and server processing operations, data storage, production support, technical services, and end-user assistance for command and control, combat support, and Enterprise Service applications across the Department of Defense (DoD). The DoD CIO is leading efforts within the Department to consolidate data centers, continue adoption of enterprise services (e.g. Email, Enterprise Portal Service, milCloud), and foster adoption of cloud computing—all of which directly impact Computing Services. At the forefront of these initiatives is the Department’s push towards the Joint Information Environment (JIE) and the designation of DISA DECCs as Core Data Centers (CDCs). CDCs are the backbone of the JIE and are highly capable, highly resilient data centers providing standardized hosting and storage services to the enterprise within the Single Security Architecture currently being implemented. CDCs also enable a significant reduction in the total number of DoD data centers by serving as consolidation points for computing and storage services currently hosted across hundreds of Component facilities. DISA continues to experience workload growth at the DECCs as missions previously hosted by DoD Components migrate to DISA. This budget reflects conservative estimates of workload growth combined with aggressive cost savings measures to achieve a 10 percent aggregate rate reduction in FY 2016. DISA is able to achieve significant cost savings through management efficiency initiatives such as the conversion of contractors to civilians, help desk labor reductions as DISA transitions to a Service Support Environment (SSE) beginning in FY 2015, increased staffing ratio targets which lead to reductions in system administration, service desk, and security information assurance contractor staffing at the DECCs, and cost savings in security, production overhead, general and administrative costs. In addition, Computing Services is eliminating 102 civilian and contractor billets effective FY 2016 due to internal efficiencies. The subsequent chart provides a summary of the major financial accounts and personnel levels in this submission. DISA proposes maintaining an accumulated operating result of -$29.8 million at the end of FY 2016, which will be offset by profits in the Telecommunications Services/Enterprise Acquisition Services business area. Additional details on operating cost and rates are discussed in later sections.

Computing Services Key Budget Data

($ in millions) FY 2014* FY 2015 FY 2016 Revenue $955.7 $1,103.6 $1,097.2 Cost $958.8 $1,099.3 $1,097.2 Net Operating Result ($3.1) $4.4 $0.0 Prior Year Accumulated Operating Results (AOR) ($31.0) ($34.1) ($29.8) AOR for Budget Purposes ($34.1) ($29.8) ($29.8) Capital Budget $36.5 $49.6 $47.7 Civilian Work years 1,886 2,009 2,021 Military End Strength 5 6 6

*Fiscal Year 2014 data are actual results. Overview Currently, there are ten DECCs: eight in the continental United States (CONUS) and two outside the continental United States (OCONUS). A Theater Enterprise Computing Center (TECC) was established in 2009 in Southwest Asia. The facilities continue to be highly accessible and secure data processing centers with dual high-capacity Defense Information Systems Network connectivity and organic defense in-depth, resulting in a secure and robust computing infrastructure. They feature automated systems management to control computing resources and to gain economies of scale. Additionally, Computing Services provides “assured computing,” whereby all mission-critical data is continuously available to customers. The Computing Centers employ highly skilled and experienced teams of government and contractor personnel to manage hardware and software applications encompassing a broad spectrum of computing, storage, and communications technologies. The facilities have been designed and are managed to provide secure, available, and interoperable environments for both classified and unclassified processing under military control. Collectively these facilities currently provide a robust enterprise computing environment to over four million users through:

• 22 mainframes • Almost 12,000 servers • Approximately 50,000 terabytes of storage • Approximately 368,000 square feet of raised floor • Survivable connectivity to the Defense Information Systems Network core

The subsequent table displays their locations. All CONUS DECCs have been designated as Core Data Centers as part of the JIE.

DECC Locations Mechanicsburg, PA Montgomery, AL

Oklahoma City, OK Ogden, UT

Columbus, OH San Antonio, TX

St. Louis, MO Warner Robins, GA OCONUS Pacific OCONUS Europe

OCONUS Bahrain (TECC) The Computing Services business area provides information processing for the entire gamut of combat support functions, such as transportation, logistics, maintenance, munitions, engineering, acquisition, finance, medical, and military personnel readiness. The applications hosted on the mainframes and servers enable the DoD components to:

• Provide for the command and control of operating forces • Ensure weapon systems availability through management and control of maintenance and

supply • Ensure global force mobility through management and maintenance of the airlift and

tanker fleets • Provide sustainment through resupply and reorder capabilities • Provide operating forces with information on the location, movement, status, and identity

of units, personnel, equipment and supplies • Manage the information for the medical environment and patient care • Support DoD business, contracting, financial, payroll and eBusiness applications

Highlights This submission includes budgeted savings from the FY 2015 baseline in FY 2016 through cost reductions of $49.3 million. As discussed above, these savings will be achieved by a combination of cost cutting initiatives such as reductions in help desk civilian and contractor labor, increased staffing ratio targets, contractor to civilian conversions, and reductions in security, production overhead, general and administrative costs. DISA will also eliminate 102 civilian and contractor billets in FY 2016. In addition, DISA anticipates lower contract costs for storage—a significant driver of direct costs for many Computing Services service offerings, to include DoD Enterprise Email. These substantial decreases in operating costs are masked by increases in workload for rate based and reimbursable services. Computing Services provides a variety of enterprise infrastructure services that continue to move the Department’s data processing toward more centralized and standardized solutions. The Enterprise infrastructure enables a collaborative environment and trusted information sharing

end-to-end that can adapt to rapidly changing conditions with the goal of protected data on protected networks. DoD Enterprise Email, DoD Enterprise Portal Service, GIG Content Delivery Service, and milCloud are capabilities that align with this strategic vision and leverage the power of the DECCs on the Department of Defense Information Network. These services are discussed in further detail below: DoD Enterprise Email (DEE) has officially been designated by DoD CIO as the enterprise email capability for the Department. DEE provides enterprise email capability to the end user at any location globally in a secure manner. Computing Services has developed this email service for customers who require seamless collaboration across an entire Department, as well as email capabilities that are both network-enabled and commander-centric. DISA’s design provides redundancy both locally and remotely for all components of the system. The email service features Pods which are the primary core of the service, and Mini-Pods providing coverage to the edge. DEE Pods and mini-Pods contain the distributed capacity architecture across eight CONUS DECCs as well as the two OCONUS DECCs, while the Mini-Pods are hosted at non-DECC customer sites. Mini-Pod infrastructure may be deployed as needed to customer sites to alleviate network distance constraints and bandwidth congestion. Each current Pod allows for approximately 50,000–75,000 business class users and 27,000–30,000 remote users. Mini-Pods have the capacity to service approximately 30,000 users and are scalable to suit customer requirements. DISA will be providing an additional offering for DEE giving mission partners the flexibility for managing DEE costs based on mailbox storage requirements. In addition to providing the Basic/Business offering for those users requiring up to 4GBs of storage, DISA has established a Premium offering for accounts requiring up to 10GBs of storage. Additionally, optional capabilities such as journaling and mobile device support are available to customers at an additional charge. Journaling is a service that permanently saves each message that a specified user sends or receives and may be required for some flag officers, high ranking appointees and Senior Executive Service members. Customers will be charged based on the number of gigabytes of storage used beginning FY 2015. Furthermore, DISA is offering a service to provide mobile support to customers billed on a per device basis. This service supports legacy BlackBerry devices and has now been enhanced to also support the new BlackBerry 10 (i.e. BBZ10) smart-phone capability. DoD Enterprise Portal Service (DEPS) is a Software as a Service (SaaS) offering that provides a flexible, web-based collaboration capability to the DoD enterprise. DEPS administrators create site collections and provide DoD Components the ability to independently create and manage their organization, community and mission-focused sites. DEPS supports multiple authentication mechanisms to include Common Access Cards (CAC), Hard Token, and Personal Identity Verification (PIV). Attribute Based Access Control (ABAC) is a future enhancement for authorization decisions. Subscribing organizations brand their sites and manage their content in order to satisfy mission requirements. Mission partners with Client Access Licenses (CALs) will have the platform to

include a suite of MS Office Web applications—the Web browser versions of Word, PowerPoint, Excel and OneNote. DEPS provides location and device-independent access to documents and preserves the user interface across end user devices. Dedicated environments are offered for Medium through Extra Large storage environments, with the ability to support user capacity from 50,000 users, up to 200,000 users. Additionally, customizable site structures and content configurations are available with the ability to leverage existing taxonomy to support unique mission requirements. GIG Content Delivery Service (GCDS) has been designated as the DoD enterprise solution for distributed content caching by the DoD CIO. GCDS provides the capability to bring web content and applications closer to the end-user, minimizing download times and increasing connection speed by forward-staging information across the Defense Information Systems Network (DISN). The service currently covers 85 regions and is in 12 countries around the world. In certain cases, GCDS hardware is hosted at Defense Enterprise Computing Centers, but is also hosted in bases, camps, and stations around the world. The sustainment costs of the service are included in the DISN subscription share price, as the network performance gains that GCDS is able to deliver benefit DISN customers. Customers requiring customization of their GCDS environment work with DISA Computing Services and are charged on a reimbursable basis for implementation costs, including consulting and advanced engineering services. This submission includes higher projected costs for dual operations of GCDS as the current contract is re-competed. The DISA’s milCloud service is a Joint Information Environment (JIE) cloud-services product portfolio featuring an integrated suite of capabilities designed to drive agility in the development, deployment, and maintenance of secure DoD applications. It features a shared, virtualized computing infrastructure environment known as a Virtual Data Center (VDC). Consumption of computing resources within the VDC is enabled via a self-service, on-demand web-based management interface. Within a VDC, resources can be configured and managed by the mission partner with a high degree of flexibility and self-service control, or resources can be configured automatically by the milCloud Orchestrator. Other benefits include economies of scale through resource pooling, reduced spending on excess idle and redundant computing infrastructure, and fewer DISA interactions necessary to provision resources.

Computing Services Trends: Increasing Workload and Efficiency

As shown in the subsequent table, demand for DISA’s server and storage computing services has grown significantly since FY 2006. Since that year, the number of customer driven server operating environments (OEs) has increased by 230 percent, and total storage gigabytes have increased by 607 percent. Over the same timeframe, the cost to deliver all computing services has increased by only 45 percent. In short, customers are demanding considerably more services and are at the same time benefiting from DISA’s unique ability to leverage robust computing capacity at the DECCs.

MAJOR CHANGES BETWEEN FISCAL YEARS

Computing Services Cost of Operations

($ in millions) FY 2014 FY 2015 FY 2016 FY 2015 President's Budget $1030.4 $1,041.5 - FY 2016 Current Estimates $958.8 $1,099.3 $1,097.2 Change FY 2015 President's Budget to Current Estimate ($71.6) $57.8 - Change FY 2015 Current Estimate to FY 2016 Current Estimate - - ($2.1)

*Fiscal Year 2014 data of current estimates are actual results. FY 2015 President’s Budget Submission to FY 2015 Current Estimate Computing Services’ FY 2015 cost of operations increases by a net of $57.8 million from the FY 2015 President’s Budget. Of the increase, $30.2 million is due to dual ops on the Processor Capacity Services contract. An additional $16.3 million of the increase is due to delays in the implementation of security efficiencies and the planned Service Support Environment (SSE) service desk consolidation, as well as in achieving previously planned staffing ratio targets. Delays in the transition to the new Storage Capacity Services contract as well as anticipated dual operations on the GCDS contract also increase costs by $4.8 million and $15.2 million, respectively. Costs also increase $10.2 million for communications engineering support for NIPRNet, SIPRNet, and DMZ activities and due to a one-time legal protest of a contract award. An additional $8.3 million of the increase is due to increased customer funded DEE workload. Computing Services is also investing $12.8

-100.0%

0.0%

100.0%

200.0%

300.0%

400.0%

500.0%

600.0%

700.0%

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014

Increase in Server and Storage Workload vs. Cost

Percent Change: Number of Server Operating Environments Percent Change: Total Storage Gigabytes

Percent Change: Total Dollars Spent on Computing Services

million in automation and other MilCloud infrastructure in order to support additional customer workload and achieve future efficiencies. These increases are partially offset by reductions in production overhead, general and administrative expenses, and contract labor of $6.3 million. This submission also includes reduced depreciation expenses of $9.5 million as DISA implements a 15-year depreciation schedule for facilities projects. Lastly, estimates of customer demand for the Defense Enterprise Portal Service (DEPS) have not materialized, and therefore this submission assumes a reduction in workload of $22.8 million. Other miscellaneous items account for the final $1.4 million decrease. FY 2015 Current Estimate to FY 2016 Current Estimate The cost of operations from FY 2015 to FY 2016 is expected to decrease by a net of -$2.1 million. Included in this change are total savings of -$65.4 million. These savings are made up of the following: management efficiency initiatives implemented across the DECCs, including in-sourcing of contractors to civilians, increased staffing ratio targets which lead to reductions in system administration, service desk, and information assurance staffing, and efficiencies in security, production overhead, and general and administrative costs (-$31.5 million); a reduction of headquarters shared costs (-$3.5 million); efficiencies in operations management (-$4.3 million); workload reductions on labor contracts (-$12.3 million); a decrease in hardware maintenance ($-1.0 million); Joint Enterprise License Agreement efficiencies (-$1.0 million); the removal of a one-time cost resulting from a contract protest (-$2.3 million); a reduction to the DISN subscription share price (-$0.6 million); and a decrease in projected workload for the DoD Enterprise Portal Service (-$8.9 million). These savings are partially offset by cost increases totaling $63.4 million. Of this amount, $15.8 million is due to inflation. In addition, there are increased costs of $5.9 million in facilities projects, $8.3 million due to enterprise software maintenance to support new workload, $3.1 million due to the tech refresh of GCDS assets, $8.0 million due to an increase in the Supercluster workload for the Processor Capacity services contract, $1.0 million due to the increase of software costs for the IT Service Management contract, $7.7 million due to an increase in depreciation as capital projects are completed, $2.4 million due to the phasing in of FTEs to the normal operating level and the expansion of DISA’s Pathway Program for recent graduates and interns, and $10.9 million due to the delay in award of the Storage Capacity services contract and revised transition strategy.

Capital Investment Program Summary: Computing Services ($ in millions) FY 2014* FY 2015 FY 2016 Equipment $27.9 $37.5 $38.2 ADPE and Telecom $0.0 $0.5 $2.5 Software $7.3 $10.1 $5.0 Minor Construction $1.3 $1.5 $2.0 Total Program Authority $36.5 $49.6 $47.7 FY 2015 President's Budget $49.2 $49.6 Change FY 2015 President’s Budget to Current Estimates ($12.6) $0.0 - Change FY 2015 Current Estimate to FY 2016 Current Estimate - - ($1.9)

*FY 2014 data are actual obligations.

FY 2015 President’s Budget to FY 2015 Current Estimates: The FY 2015 current estimate reflects no change from the FY 2015 President’s Budget estimate. FY 2015 Current Estimate to FY 2016 Current Estimate: There is a $1.9 million net decrease in capital requirements from FY 2015 to FY 2016. Of this, a $0.75 million increase is required to support facilities upgrades for mechanical system upgrades, chillers, pumps, cooling towers, generators and Uninterruptable Power Supply units at DECCs San Antonio and Columbus. ADPE & Telecom increases $2.0 million due to an Enterprise Unified Communications Project. Minor construction increases $0.5 million which includes electrical capability upgrades at Columbus and San Antonio. Software decreases $5.1 million due to completion of several software management tools projects. Together, these facility and data center administration tool upgrades will aid in better aligning the DECC footprint with the goals set forth in the DoD Information Technology Enterprise Services Roadmap.

Civilian Personnel

($ in millions) FY 2014* FY 2015 FY 2016 Civilian End Strength 1,876 2,083 2,043 Civilian Full Time Equivalents 1,886 2,009 2,021 Civilian Labor Cost $226.2 $233.5 $239.8 *Fiscal Year 2014 data are actual results. End strength and full-time equivalents (FTEs) are significantly reduced in FY 2014 due to personnel restructuring that delayed staffing. Due to the delay in staffing, hiring actions to support customer-funded workload are reflected in FY 2015 civilian manpower levels, resulting in a net increase of 123 FTEs from FY 2014 to FY 2015.

Civilian manpower increases by a net of 12 FTEs in FY 2016. This is primarily due to an increase to support customer-funded workload as well as an effort to reduce costs by converting contractor positions to government civilian positions. These increases are partially offset by efficiencies in operations management and the elimination of positions as part of efficiency savings.

Military Personnel ($ in millions) FY 2014* FY 2015 FY 2016 Military End Strength 5 6 6 Military Labor Costs $0.9 $0.9 $0.9 *Fiscal Year 2014 data are actual results. This submission represents the three year average fill rate for Computing Services in accordance with DoD financial policy. Military personnel cost remains unchanged from the approved FY 2015 President’s Budget for FY 2014 and FY 2015.

Performance Measures

DISA’s information services play a key role in supporting the Department’s operating forces. As a result, DISA is held to high performance standards. In many cases, performance measures are detailed in Service Level Agreements (SLAs) with individual customers that exceed the general performance measures discussed in the remainder of this section. Computing Services Performance Measures The two metrics depicted in the subsequent tables reflect the availability of critical applications in the Defense Enterprise Computing Centers. The first metric, “Core Data Center Availability,” expressed as a percentage of availability, represents application availability from the end user’s perspective and includes all outages or downtime regardless of root cause or problem ownership. Tier II requires achieving 99.75% availability, which results in about 1,315 minutes of downtime per year. Tier III, the standard for all DoD-designated Core Data Centers, requires achieving 99.98% availability, which results in about 105 minutes of downtime per year. A continuing series of electrical and mechanical investments in the DISA DECC facilities since 2008 have resulted in a steady decline in facility downtime. The second metric, “Capacity Service Contract Equipment Availability” represents DISA’s equipment availability by technology, i.e., how well DISA is executing its responsibilities exclusive of factors outside the agency's control such as last mile communications issues, base power outages or the like. The Threshold refers to system uptime and capacity availability for intended use; this is the level required by contract. The Objective is the value agreed on by the vendor and the government to be an ideal target, and Actual is reported by the vendor monthly.

Core Data Center Availability

Capacity Service Contract Equipment Availability

FY 2014 Actual 958.775

FY 2015 Estimate in FY 2015 President's Budget 1,041.484

ESD Management-efficiency initiatives:Savings associated with security reductions, Single Security Environment/Helpdesk consolidation, and increased staffing ratio targets for application hosting will not be realized at the levels previously planned 16.307Reduction in production overhead, G&A, and contract labor (6.628)

Program Changes:Global Content Delivery Service (GCDS) dual operations and/or tech refresh as the service transitions to a new contract 15.225Delay in the award/transition to the new storage capacity services contract 4.815

Parallel processing due to a delayed transition to the new processor capacity services contract 30.151One-time legal protest of contract workload 2.263Increased communications engineering support for NIPR/SIPR & Demilitarized Zone (DMZ) workload 4.447Civilian labor increase in support of new workload 3.451Decrease in depreciation expenses as a result of moving to a 15 year depreciation schedule for facilities (9.499)Travel reduction (0.827)

Workload Changes:Increased customer adoption of DoD Enterprise Email 8.325Reduced workload estimates for DoD Enterprise Portal Service (22.807)Increased customer migration to milCloud 12.793 Workload reduction for SyNaps (0.538)

Miscellaneous 0.311

FY 2015 Current Estimate 1,099.273

Exhibit Fund 2, Changes in the Costs of Operations

Changes in the Costs of OperationsDefense Information Systems Agency

COMPUTING SERVICESFebruary 2015



COMPUTING SERVICESFebruary 2015



Pricing Adjustments: Non-Labor Inflation 12.963 Civilian/Military Pay Raise 2.265 Annualization of Civ/Mil Pay Raise 0.586

ESD Management-efficiency initiatives:Increased staffing ratio targets for application hosting (6.616)In-sourcing of contractor personnel to government positions (2.596)Efficiencies in production overhead, G&A, and security (22.308)

Program Changes:Civilian labor increases due to the expansion of the agency's Pathway Program for recent graduates and interns 2.354Increase in depreciation expenses due to completion of facilities projects 7.682Reduced overhead allocation of headquarters cost due to various managment efficiencies (3.520)Efficiencies in operations management (4.313)Decrease in costs as a result of lower FY 2016 DISN Subscription Services share price (0.635)Completion of one-time legal protest of contract (2.263)Increase in facilities projects to align with JIE strategy 5.923Savings from expanded use of Joint Enterprise License Agreement (1.000)Increased enterprise software maintenance in support of new customer-driven workload 8.324Tech refresh to update GCDS assets 3.103Increase in software costs for the IT Service Management contract, a suite of enhanced and automated tools providing enterprise-wide Information Technology Infrastructure Library 1.022Decrease in hardware maintenance for the communications contract (1.000)Increase processor capacity services contract associated with Army-funded workload for Oracle's SuperCluster engineered system 7.986Dual operations for storage capacity services during the transition to a new contract 10.883

Workload Changes:Reduction in DoD Enterprise Email and DoD Enterprise Portal Service implementation costs (8.900)Decrease in labor contracts supporting enterprise service offerings (DEE and DEPS) as well as specific requirements for the Defense Logisitics Agency (12.273)

Miscellaneous 0.277



Source of New Orders and Revenue Defense Information Systems Agency

PE54 COMPUTING SERVICESFebruary 2015


2014 2015 2016

1. New Orders

a. ORDERS FROM DoD COMPONENTS $503.423 $651.393 $663.613

ARMY APPROPRIATED $104.577 $167.056 $180.072

Army O&M $101.654 $166.496 $179.533

Army RDT&E $0.523 $0.533 $0.516

Army Procurement $2.400 $0.027 $0.023

Army MILCON $0.000 $0.000 $0.000

Army BRAC $0.000 $0.000 $0.000

NAVY APPROPRIATED $34.733 $44.398 $41.656

Navy O&M $34.684 $44.385 $41.643

Navy RDT&E $0.049 $0.013 $0.013

Navy Procurement $0.000 $0.000 $0.000

Navy MILCON $0.000 $0.000 $0.000

Navy BRAC $0.000 $0.000 $0.000

MARINE CORPS APPROPRIATED $30.574 $28.007 $33.258

Marine Corps O&M $30.574 $28.007 $33.258

Marine Corps RDT&E $0.000 $0.000 $0.000

Marine Corps Procurement $0.000 $0.000 $0.000

Marine Corps MILCON $0.000 $0.000 $0.000

Marine Corps BRAC $0.000 $0.000 $0.000

AIR FORCE APPROPRIATED $111.801 $166.582 $139.057

AF O&M $100.004 $159.251 $132.348

AF RDT&E $11.679 $7.331 $6.709

AF Procurement $0.118 $0.000 $0.000

AF MILCON $0.000 $0.000 $0.000

AF BRAC $0.000 $0.000 $0.000

DISA APPROPRIATED $105.101 $118.621 $107.742

DISA O&M $102.431 $116.181 $105.351

DISA RDT&E $2.614 $2.417 $2.378

DISA Procurement $0.056 $0.023 $0.013

DISA MILCON $0.000 $0.000 $0.000

DISA BRAC $0.000 $0.000 $0.000

DEFENSE WIDE APPROPRIATED $32.757 $44.271 $72.439

Defense Wide Appropriated O&M $26.273 $36.771 $63.968

Defense Wide Appropriated RDT&E $5.703 $6.847 $7.670

Defense Wide Appropriated Procurement $0.781 $0.653 $0.801

Defense Wide Appropriated MILCON $0.000 $0.000 $0.000

Defense Wide Appropriated BRAC $0.000 $0.000 $0.000

OTHER DoD APPROPRIATED $83.880 $82.458 $89.389

Exhibit Fund 11 - Source of New Orders and Revenue




2014 2015 2016

Other DoD Appropriated O&M $83.196 $82.435 $89.367

Other DoD Appropriated RDT&E $0.661 $0.000 $0.000

Other DoD Appropriated Procurement $0.023 $0.023 $0.022

Other DoD Appropriated MILCON $0.000 $0.000 $0.000

Other DoD Appropriated BRAC $0.000 $0.000 $0.000

b. ORDERS FROM DWCF/REVOLVING FUNDS $446.723 $446.325 $427.777

ARMY - WCF $1.727 $1.761 $1.642

Army Industrial Operations $1.727 $1.761 $1.642

NAVY - WCF $18.212 $15.200 $16.131

Navy Depot Maintenance $4.380 $4.555 $3.648

Navy Base Support $0.000 $0.000 $0.000

Navy Supply Management $13.142 $10.300 $12.251

Marine Corps Supply $0.000 $0.000 $0.000

Marine Corps Depot Maintenance $0.000 $0.000 $0.000

Other Navy Activity Groups $0.690 $0.345 $0.232

AIR FORCE - WCF $34.463 $32.320 $29.654

Consolidated Sustainment Activity Group (CSAG) $13.945 $12.209 $11.507

U.S. Transportation Command (TRANSCOM) $20.518 $20.111 $18.147

DEFENSE WIDE WCF $391.114 $394.995 $378.502

DISA Telecomm Svcs/Ent Acquisition Svcs (TS/EAS) $94.994 $115.059 $115.573

DISA Computing Services (CSD) $0.000 $0.000 $0.000

Defense Finance and Accounting Service (DFAS) $102.447 $105.381 $99.323

DLA Energy Management $0.000 $0.000 $0.000

DLA Defense Automated Printing Services (DAPS) $7.799 $7.082 $6.671

DLA Supply Chain Management $185.874 $167.473 $156.935

DEFENSE COMMISSARY AGENCY (DECA) $0.001 $0.583 $0.568

DECA Operations $0.001 $0.583 $0.568

DECA Resale $0.000 $0.000 $0.000

OTHER - WORKING CAPITAL $1.206 $1.466 $1.280

OTHER REVOLVING FUNDS $0.000 $0.000 $0.000

Corps of Engineers $0.000 $0.000 $0.000

National Defense Stockpile Transaction Fund $0.000 $0.000 $0.000

Pentagon Reservation Maintenance Revolving Fund $0.000 $0.000 $0.000

PRMRF/BMF $0.000 $0.000 $0.000

c. TOTAL DoD ORDERS $950.146 $1,097.718 $1,091.390

d. OTHER ORDERS $5.507 $5.923 $5.823





2014 2015 2016

OTHER FEDERAL AGENCIES $5.507 $5.923 $5.823

TRUST FUNDS $0.000 $0.000 $0.000

NON-FEDERAL ORDERS $0.000 $0.000 $0.000

FOREIGN MILITARY SALES $0.000 $0.000 $0.000

TOTAL NEW ORDERS $955.653 $1,103.641 $1,097.213

2. Carry In Orders $0.000 $0.000 $0.000

3. TOTAL GROSS ORDERS $955.653 $1,103.641 $1,097.213


Revenue and ExpensesDefense Information Systems Agency



2014 2015 2016

Revenue

Gross Sales $955.653 $1,103.641 $1,097.213

Operations $939.144 $1,082.590 $1,068.480

Capital Surcharge $0.000 $0.000 $0.000

Depreciation $16.509 $21.051 $28.733

Other Income $0.000 $0.000 $0.000

Refunds/Discounts (-) $0.000 $0.000 $0.000

Total Income: $955.653 $1,103.641 $1,097.213

Costs

Cost of Material Sold from Inventory $0.000 $0.000 $0.000

Salaries and Wages: $227.090 $234.379 $240.717

Military Personnel Compensation & Benefits $0.914 $0.917 $0.907

Civilian Personnel Compensation & Benefits $226.176 $233.462 $239.810

Travel & Transportation of Personnel $1.692 $2.228 $2.223

Materials & Supplies (For internal Operations) $0.817 $1.019 $1.032

Equipment $0.000 $0.000 $0.000

Other Purchases from Revolving Funds $28.867 $30.564 $29.821

Transportation of Things $0.208 $0.118 $0.118

Depreciation - Capital $16.509 $21.051 $28.733

Printing and Reproduction $0.004 $0.023 $0.023

Advisory and Assistance Services $0.000 $0.000 $0.000

Rent, Comm, Utilities, & Misc. Charges $274.191 $306.351 $279.270

Other Purchased Services $409.377 $503.540 $515.280

Total Costs $958.755 $1,099.273 $1,097.217

Operating Results ($3.102) $4.368 ($0.004)

Less Capital Surcharge Reservation $0.000 $0.000 $0.000

Less Recover Other $0.000 $0.000 $0.000

+ Passthrough or Other App. Affecting NOR $0.000 $0.000 $0.000

- Passthrough or Other App. not Affecting NOR $0.000 $0.000 $0.000

Other Adjustments Affecting NOR $0.000 $0.000 $0.000

Net Operating Results ($3.102) $4.368 ($0.004)

Prior Year AOR ($24.887) ($34.142) ($29.774)

Other Changes Affecting AOR ($6.153) $0.000 $0.000

Total AOR ($34.142) ($29.774) ($29.778)

Retained AOR $0.000 $0.000 $0.000

Cumulative Retained AOR $0.000 $0.000 $0.000

AOR for Budget Purposes ($34.142) ($29.774) ($29.778)

Exhibit Fund 14 - Revenue and Expenses


Defense Working Capital Fund Telecommunications Services/Enterprise Acquisition Services (TS/EAS)


The Telecommunications Services component of the Information Services Activity Group provides a set of high quality, reliable, survivable, and secure telecommunications services to meet the Department’s command and control requirements. The major component of Telecommunications Services is the Defense Information Systems Network (DISN). The DISN provides the interoperable telecommunications connectivity and value-added services required to plan, implement, and support operational missions through dynamic routing of voice, data, text, imagery (both still and full motion), and bandwidth services. The robustness of this telecommunications infrastructure has been demonstrated by DISA’s repeated ability to meet terrestrial and satellite surge requirements in Southwest Asia while supporting disaster relief and recovery efforts throughout the world. Overall, the DISN provides a lower customer price through bulk quantity purchases, economies of scale and reengineering of current communication services. Some of the DISN services are provided to customers in pre-defined packages and sold on a subscription basis, while other services are sold individually on a cost reimbursable basis. This submission includes significant efforts to reduce information technology and telecommunications costs across the Department, including partnering with Army to implement Joint Regional Security Stacks, continued elimination of legacy systems and replacement with IP-based services, and efficiencies in network security requirements across the DISN. These efforts are discussed in detail on the following pages. The Enterprise Acquisition Services component is the Department’s ideal source for procurement of best-value and commercially competitive information technology. Enterprise Acquisition Services provides contracting services for information technology and telecommunications acquisitions from the commercial sector and provides contracting support to the DISN programs, as well as to other DISA, DoD, and authorized non-Defense customers. This budget reflects significant projected workload growth for Enterprise Licensing Agreements (ELAs). Although customer adoption of ELAs had been slower than expected in FY 2014, growth in this area is expected and will enable the Department to capitalize on economies of scale for software purchases.

Telecommunications Services/Enterprise Acquisition Services (TS/EAS) Key Budget Data

($ in millions) FY 2014* FY 2015 FY 2016 Revenue $6,164.1 $7,146.0 $7,728.0 Cost $6,044.0 $7,084.8 $7,623.5 Net Operating Result $120.0 $61.2 $104.6 Other Factors Affecting NOR** $0.0 $0.0 ($62.0) Prior Year Accumulated Operating Results (AOR) $145.3 $265.3 $97.4 Total AOR $265.3 $326.5 $140.0 Retained AOR $0.0 $229.1 $110.2 Total Retained AOR $0.0 $229.1 $339.3 AOR for Budget Purposes $265.3 $97.4 $29.8 Capital Budget $17.1 $38.4 $1.0 Civilian Work years 1,463 1,532 1,558 Military End Strength 74 82 69

*Fiscal Year 2014 data are actual results. ** JRSS sustainment added to DSS only recognized revenue not cost. Cost will be recognized at a later date. The table above provides a summary of the major financial accounts and personnel levels in this budget request. All data are best estimates of anticipated customer workload, the resulting Defense Working Capital Fund (DWCF) costs, and profit/loss. As discussed in the overview narrative, our business areas continue to evolve and become interdependent cost centers of an integrated technical architecture. Therefore, DISA assesses profit/loss factors holistically for rate setting purposes. This approach minimizes rate fluctuations. In FY 2015 and FY 2016, stabilized rates are set to recapitalize the cash corpus of the fund and improve DISA's unobligated balance. As shown in the above summary chart for Telecommunication Services/Enterprise Acquisition Services, DISA plans to retain $339.3 million of accumulated operating results through FY 2016. This retained AOR will allow DISA to remain operationally flexible as new requirements such as Government-wide Accounting (GWA) and associated daily cash reporting will increase the volatility of cash levels. Additional details on TS/EAS operating cost and rates are discussed in later sections.

Telecommunications Services Program Structure The table below illustrates DISA’s telecommunication service offerings and the major cost centers that support those offerings:

DISN Program Element Program Function Program Sub-Function Product Offering/Description

Defense Switched Network (DSN)Defense Red Switch Network (DRSN)

Non-Secure Internet Protocol Network (NIPRNet)Secure Internet Protocol Network (SIPRNet)Joint Worldwide Intelligence Communications System (JWICS)DISN Leading Edge Services (DISN-LES) - testing network

AccessBackbone

WarehousingMinor EquipmentInstallationOther Sustaining Activities

Enterprise Cross Domain ServicesNetwork Operations of Enterprise InfrastructureNetwork HardeningPKI and DirectoriesSecure Configuration Management

Network Security MonitoringCommand Cyber Readiness Inspections (CCRIs)

Voice Services

Mission AssuranceSecurity and Assurance

Transport Support

Ensures hardware and software acquired from multiple sources functions with like products.

Video

Real Time Services

Reimbursable legacy technologies (e.g., ATM and ISDN)

Joint Regional Security Stack (JRSS)

Other Services

Satellite Services

Mission Assurance

Joint Regional Security Stack (JRSS)Security and Assurance

Field Security Operations (FSO)

Maintenance

Information Assurance Activities

Operational Support Services


Customer Support Services

Connection Approval Office

Network Services Support

Public Key Infrastructure (PKI)

Network Oversight

DoD COOP Integrated Network (DCIN)Circuit Integration Support

Customer Funded Projects (CFP)

Joint Hawaii Information Transfer System (JHITS)Commercial Satellite Services (COMSAT)

Core Sustaining Activities

MobilityOrganizational Messaging

DoD Enterprise Classified Travel Kit (DECTK)

DISN SUBSCRIPTION SERVICE

Cross Domain Services (CDS)

Enhanced Mobile Satellite Services (EMSS)Mobile Satellite Service Broadband Global Access Network (MSS BGAN)

Centralized Services

Theater Network Operations

OTHER TELECOM SERVICES

Voice

Data

Interoperability

Transport

Bandwidth Management

DISN Subscription Services

Highlights: This submission includes a reduction to DISN Subscription Services costs in FY 2016. These cost savings, combined with prior year operating results and lower FY 2015 costs, result in a 9.3 percent reduction in the FY 2016 DISN Subscription Share Price. Details of how the savings will be achieved are discussed below. The DISN Subscription Services consist of the following: Transport Services provide a robust worldwide capability to transmit voice, video, data and

message traffic for the Combatant Commanders, Military Departments and Defense Agencies. Transport Services provide the information transport for other services described subsequently, as well as for specialized services. This budget reflects much of DISA’s key initiatives like expanding core implementation and sustaining activities for the joint information environment (JIE) architecture. Enhancements include: the joint DISA/Army effort to consolidate overlapping optical transport networks in Europe; router upgrades to improve diversity and support advanced multi-protocol label switching (MPLS) and IP routing technologies, which will bring the network in line with 100G connectivity; and Internet Access Point (IAP) expansion in CONUS and IAP Router upgrades in OCONUS to improve bandwidth utilization and reduce Internet latency and packet loss. Despite ongoing network expansion, decreased costs for transport services are planned due to continued efforts to eliminate and optimize legacy systems, improve bandwidth utilization, and transition to more cost effective circuit leases.

Voice Services provide day-to-day commercially competitive services plus unique secure

military requirements. Voice Services include operation of the unclassified Defense Switched Network and the classified Defense Red Switch Network. This budget reflects the DoD’s overarching technical strategy and directive to implement technology replacement of legacy systems with IP-converged services. The unclassified legacy service (DSN) will transition the current network infrastructure from a Time Division Multiplexing (TDM) circuit-switched network to an IP-based network by FY 2016.

Video Services provide global unclassified and classified video teleconferencing capabilities for

the DoD and other government agencies. Consistent with the DoD’s Unified Capabilities Master Plan, DISA has partnered with Industry to develop a Global Video Service for over 2.4 million users. This solution provides IM/Chat/presence, collaboration, and peer-to-peer and multi-user conferencing over an IP-based network. DISA began offering the next generation of video teleconferencing services in FY 2014 and will completely eliminate the legacy video service (DVS-G) infrastructure by FY 2016.

Data Services provide Secure Internet Protocol Router Network as well as Non-classified

Internet Protocol Router Network capabilities. Additionally, Data Services includes IP transport for the Defense Intelligence Agency-managed Joint Worldwide Intelligence Communications System by providing comprehensive, worldwide, secure high-speed

multimedia, Top Secret/Sensitive Compartmented Information communications services for the DoD intelligence community and other federal agencies. Data Services also includes DISN Test and Evaluation Network support, which is used by the command, control, intelligence, and mission support communities to conduct development, certification, and operational test and evaluation activities to ensure programs meet network requirements prior to deployment.

The following items describe the activities necessary to maintain the DISN’s operational capability and achieve the high-availability, secure, and robust service that our DoD customers require. Operational Support Services provides the tools necessary to automate the operations,

administration, maintenance, and provisioning/engineering activities for the DISN. These same tools give network managers/monitors the capability to “see” the network in real-time, a critical capability necessary to resolve crisis and other network events. This budget includes the elimination of a number of legacy service management systems by the end of FY 2016 as mission partners are migrated to IP-based technologies.

Mission Assurance activities support the DISN by designing and deploying proactive

protections, deploying attack detection, and performing information assurance operations to ensure that adequate security is provided for information collected, processed, transmitted, stored, or disseminated on the Department of Defense Information Network (DODIN). These efforts include tasks associated with affording protection to telecommunications, information systems, and information technology that process sensitive and classified data as well as efforts to ensure the confidentiality, authenticity, integrity, and availability of the information and the systems. Specifically, this includes activities such as trusted identity and access management infrastructure enabling common access card logon to DoD systems and applications while facilitating secure net-centric information sharing and a host-based security system solution suite of tools allowing prevention, detection, tracking, reporting, and remediation of malicious computer-related activities and incidents across all DoD networks and information systems throughout the DoD Enterprise. This budget includes efforts to streamline and consolidate information assurance contracts in order to deliver savings to DISN customers while maintaining high levels of network security.

Security and Assurance Services enhance the security and availability of the Department of

Defense Information Network (DODIN) by ensuring adherence to Information Assurance and Network Operations policies. Services to be recovered via the DISN share price are network security monitoring and oversight of sensors installed on the DISN backbone and Command Cyber Readiness Inspections. Additional security and assurance services are described in subsequent sections and are provided as separate reimbursable offerings.

Centralized Services are a group of critical mission support activities that support all DISN services. These services are critical in maintaining the DISN’s operational capabilities and achieving the high-availability, secure, and robust services required by DISN

customers. The centralized services support all DISN products and services, and consist of the following groups:

• The Connection Approval Office approves secure interoperable connections in

support of the operating forces and mission partners for applications, information systems and networks authorized to operate on the enterprise infrastructure.

• Customer Support Services operates the DISN Customer Call Center, located at Columbus, Ohio, to respond to customer incidents and connection issues 24 hours per day, 365 days per year.

• The DISA Theater Network Operations Centers monitors and reacts to real-time network traffic and events. The Theater Network Operations Centers and Field Commands are located in the Continental United States, Southwest Asia, Pacific, and Europe and are staffed 24 hours per day, 365 days per year.

As previously discussed, DISN services are bundled together and sold on a subscription package basis. The Department of Defense uses the matrix shown below to distribute costs to users based on two factors; the services they receive and the bandwidth DISA is required to provision in order to deliver those services. Each DISN site is assigned a number of shares based on the matrix, which combined with the per-share price, determines the total annual “subscription” for the military departments/agencies. The DISA updates the DISN site list annually based on input from the DoD components. Bandwidth Size

Subscription Service Package Small ≤DS3

Medium >DS3 to ≤OC3

Large >OC3 to ≤OC12

Mega >OC12

Transport/ISR Only: No DISN Services 1 1 1 1

Num

ber

of S

hare

s

Mission Essential: Any of the following - SIPRNet, NIPRNet, Unclassified Voice, Video Services

1 2 6 8

Command and Control (C2): Any of the following with some form of Diversity - SIPRNet, NIPRNet, Unclassified Voice, Video Services

2 8 24 36

C2 Plus: C2 with Joint Worldwide Intelligence Communications System or Classified Voice

5 10 30 40

C2ISR: C2, Joint Worldwide Intelligence Communications System, Classified Voice, and Intelligence, Surveillance, and Reconnaissance (ISR)

8 16 48 72

The table below provides a synopsis of DISN Subscription Services financial data for this budget submission, including the calculated share price:

($ in millions) FY 2014* FY 2015 FY 2016 Transport $551.6 $573.1 $515.8 Real Time Services (voice, video, data, interoperability) $157.9 $159.3 $154.3

Mission Assurance (includes Security & Assurance Svcs) $199.4 $245.3 $220.8

Centralized Services Operational Support Services $166.4 $169.6 $159.0 Other Centralized Services $107.3 $129.8 $107.4 DISA Network Operations Centers $37.5 $38.4 $36.6 Total DISN Subscription Services Costs $1,220.0 $1,315.4 $1,193.9 Number of Sites 347 339 337 Number of Shares 8,778 8,849 9,129 Price Per Share (whole dollars) $148,753 $151,579 $137,500 Unit Cost Per Share (whole dollars) $138,984 $148,653 $130,780 *Fiscal Year 2014 data are actual results. The table below shows the distribution of all subscription services shares by customer, as well as the associated cost to each customer (revenue collected by DISA) for FY 2015 and FY 2016.

Service/Agency ($ in Millions) FY 2015 Shares

FY 2015 Cost to

Customer

FY 2016 Shares

FY 2016 Cost to

Customer Army 2,193 $332.4 2,256 $310.2 Navy 1,823 $276.3 1,786 $245.6 Marine Corps 458 $69.4 477 $65.6 Air Force 3,719 $563.7 3,889 $534.7 Defense Agencies 337 $51.1 407 $56.0 Other DoD 206 $31.2 206 $28.3 Other Federal and Non-Federal Agencies 113 $17.1 108 $14.9 TOTAL 8,849 $1,341.3 9,129 $1,255.2

The increase in shares shown in the above table indicates that the historical trend of increased customer demand for bandwidth and DISN services continues. As explained in further detail subsequently, customer-driven increases in shares drive program growth in customer accounts.

TS/EAS Trends: Increased Customer Demand for Network Services As previously discussed, specific network services are packaged together and sold on a subscription basis. After consultation and coordination with subscription services customers, DISA develops a subscription services site and shares list each year. The number of shares assigned to a specific customer (at any particular site) are directly related to the amount of bandwidth provisioned at a site in order to meet the customer’s demand and the types of DISN services that the customer requires at the site. Therefore, an increase in shares is an indication of increased customer demand for bandwidth and/or DISN services. The table below shows 4.0 percent growth in customer demand as measured by number of shares over the most recent three-year period: Shares Change Percent Change Shares Service/Agency FY 2014 FY 2014 to FY 2016 FY 2014 to FY 2016 FY 2016 Army 2,177 79 3.6% 2,256 Navy 1,812 -26 -1.4% 1,786 Marine Corps 458 19 4.1% 477 Air Force 3,614 275 7.6% 3,889 Defense Agencies 376 31 8.2% 407 Other DOD 206 0 0.0% 206 Other Federal and Non-Federal Agencies 135 -27 -20.0% 108

TOTAL 8,778 351 4.0% 9,129 The table below illustrates that customer demand for DISN services and bandwidth continues to increase by displaying the change in number of sites by service package and bandwidth size over the most recent three-year period (FY 2014 to FY 2016).

Bandwidth Size

Subscription Service Package Small Medium Large Mega ≤DS3 >DS3 to

≤OC3 >OC3 to ≤OC12

>OC12

Transport/ISR Only: No DISN Services -1 +1 -- --

Cha

nge

in N

umbe

r of

Site

s Mission Essential: Any of the following - SIPRNet, NIPRNet, Unclassified Voice, Video Services -7 +2 -5 +1


-- -4 -5 +12

C2 Plus: C2 with Joint Worldwide Intelligence Communications System or Classified Voice -4 -- -6 +5


-- -- -1 +2

DISN Reimbursable Programs

In addition to the DISN Subscription Services previously discussed, DISA offers several other reimbursable telecommunications services, as shown in the table below, and described in the following section: ($ in millions) FY 2014* FY 2015 FY 2016 Commercial Satellite Services $485.9 $522.6 $535.0 Enhanced Mobile Satellite Services (Iridium) $100.0 $120.8 $138.1 Overseas Contingency Operations (OCO) $9.1 $0.0 $0.0 Customer-unique Projects $24.2 $39.1 $68.2 Joint Hawaii Information Transfer System $18.2 $18.5 $18.9 Organizational Messaging $39.2 $20.3 $20.6 Mobility $0.4 $11.6 $13.7 Public Key Infrastructure - Service to Other Federal Agencies $2.6 $4.4 $4.0 Security and Assurance Services $28.4 $43.4 $42.1 Defense Continuity of Operations Integrated Network $3.2 $3.4 $3.4 Cross Domain Services $9.4 $11.2 $11.6 DISA/Army Joint Regional Security Stack $4.2 $62.8 $94.9 Other Reimbursable Services $4.3 $7.0 $10.3 Total DISN Reimbursable Costs $729.1 $865.1 $960.9 *Fiscal Year 2014 data are actual results. Commercial Satellite Communications (COMSATCOM) services include global and regional

access to commercial satellite communications for voice, data, imagery, broadcast, and teleconferencing networks in secure and non-secure modes. This includes both fixed satellite services and mobile satellite services.

Enhanced Mobile Satellite Service (EMSS) is a global mobile satellite communications system

that provides secure voice, data, paging, and messaging communications capabilities to DoD, non-DoD, and foreign subscribers as needed. This program also offers the Distributed Tactical Communications System, comprised of push-to-talk voice and data services that leverage the Iridium constellation to provide a handheld, over the horizon, beyond-line-of-sight, tactical communications solution for U.S. troops in remote locations, enabling a user to communicate with multiple users at the same time. Cost increases in FY 2016 are primarily attributable to increased depreciation costs for capital projects, as well as the planned increase for EMSS’s multi-year Airtime contract, awarded in FY 2014.

Overseas Contingency Operations (OCO) (through FY 2014) include costs for bandwidth lease

requirements that provide in-theater COMSATCOM capabilities for voice, data, imagery, broadcast, and teleconferencing networks.

Customer Funded Projects are initiated when DoD components request special network assistance as their missions change and/or expand. These actions are executed on a 100 percent customer reimbursable basis.

The Joint Hawaii Information Transfer System (JHITS) provides voice, video, and data

services to military bases in the state of Hawaii. Costs are estimated to remain stable through the budget year.

Organizational Messaging provides secure and guaranteed exchange of messages between DoD

and non-DoD organizations, Allies, and the intelligence community (IC). In FY 2014, this service was modified to provide only mission critical messaging traffic in support of national security. Savings in FY 2015 reflect the transition of the current legacy messaging services to Information Transport Services (ITS). Support will continue for automated message handling systems by using legacy national gateway centers as infrastructure. This significantly simplifies the DoD Messaging architecture, provides essential capabilities for the NC3 community, and continues interoperability with Allies, the IC, and non-DoD organizations.

DoD Mobility supports both unclassified and classified mobile communications using multiple

types of devices. The DISA provides the commercial carrier gateway for both 3G and 4G network traffic, hosted at DISA DECCs, to facilitate moving the commercial carrier traffic through the DISN to access user email, DoD web sites, a DoD application store, and other DoD-specific applications. Sustainment costs driven by customer-specific requirements, i.e. Mobile Device Management hardware, Mobile Application Store, software licenses, and 24x7 operational support are recovered on a reimbursable basis through the DWCF.

PKI as a Service to other Federal agencies allows Federal entities to utilize DoD’s PKI

infrastructure for user authentication. The service provides access credentials to support identity authentication, data integrity, and communications privacy on Secret level networks. The DISA is the National Security System (NSS) Common Service Provider (CSP) and provides PKI service to the requesting agency on a reimbursable basis.

Security and Assurance Services requested by specific customers are recovered via

reimbursement. Certain services are provided as stand-alone offerings, while others are bundled into subscriptions. Examples of services requiring direct reimbursement include the certification of systems, Computer Network Defense Service Provider (CNDSP) inspections, IA readiness reviews, and malware analysis.

The Defense Continuity of Operations Integrated Network (DCIN) is a classified Pentagon

network utilized by senior DoD leadership. Network costs remain stable in FY 2015 and FY 2016.

Cross Domain Services (CDS) are responsible for enhancing security and availability of the

Department of Defense Information Network (DODIN) by ensuring adherence to Information Assurance and NetOps policies governing transfer of information between

domains. Services offered on a cost reimbursable basis include Enterprise Hosted Structured File Transfer and Enterprise Hosted Web Service functions. Services related to Enterprise Cross Domain Email and Enterprise Cross Domain File Sharing are included in DISN Subscription Services.

The Joint Regional Security Stack (JRSS) is a new architecture-sharing and modernization

approach to managing the network which began in FY 2014. Hundreds of Army’s network security stacks will be consolidated into regional security stacks where DISA will be responsible for providing sustainment support. Regional security stacks are designed to improve network defense command and control and situational awareness and are essential to enabling single security architecture in the joint information environment (JIE) and increasing network security posture. Sustainment of completed Joint Regional Security Stacks will be funded within DISN Subscription Services beginning in FY 2016. Prior to FY 2016, costs will be recovered on a reimbursable basis.

The DoD Enterprise Classified Travel Kit (DECTK) is a new service that provides combatant

commanders and other high-profile users with remote access, via the Internet, to Enterprise Classified Voice over Internet Protocol (ECVoIP) and SIPRNet data services. Costs for program management, such as engineering, implementation, and maintenance will be recovered on a direct reimbursable basis. Customers are responsible for procuring their own travel kits.

As DISN legacy technologies are declared obsolete, DISA has established policy to remove the

costs for these services from the DISN Subscription Services rate. Customers who elect to continue using legacy services will pay for those services on a reimbursable basis. This approach is designed to incentivize mission partners to move to new technologies and away from more costly legacy services. Beginning in FY 2016, costs for Asynchronous Transfer Mode (ATM) and Integrated Services Digital Network (ISDN) will be recovered on a reimbursable basis. The availability of Multi-Protocol Label Switching (MPLS) and Quality of Service (QoS) renders these services obsolete and generally no longer necessary for most DISN users. Rates will be established as mission partner requirements are refined.

Enterprise Acquisition Services

The primary mission of the Information Services Activity Group - Enterprise Acquisition Services (EAS) component is to meet Department of Defense (DoD) and authorized non-defense customers’ requirements for telecommunications and information technology (IT) products and services from the worldwide commercial sector through flexible, innovative, and responsive acquisition actions. The mission also includes acquisition planning, procurement, tariff surveillance, cost and price analyses, and contract administration. The Enterprise Acquisition Services component encompasses a variety of support services to meet information technology contract requirements and provides contract support to all DISN subscription services. This budget submission reflects workload growth for Enterprise Licensing Agreements over current

orders. This new workload provides economies of scale to the DoD when purchasing software licenses. The following table shows the value of the contracts projected for each fiscal year by service/agency. ($ in Millions) FY 2014* FY 2015 FY 2016 Army $1,068.9 $1,271.7 $1,332.9 Navy $233.2 $220.6 $245.5 Marine Corps $24.9 $26.8 $27.4 Air Force $452.4 $486.1 $557.5 Defense Agencies $2,168.0 $2,739.7 $3,115.1 Other DoD $89.6 $117.9 $158.5 Other Federal and Non-Federal Agencies $76.8 $76.9 $75.0 Total Gross Orders $4,113.7 $4,939.6 $5,511.9

*Fiscal Year 2014 data are actual results. Contracting Services mission is accomplished by DISA’s Defense Information Technology

Contracting Organization (DITCO), which provides contracting services for the Defense Information Systems Network (DISN), Computing Services, and a wide range of other DoD programs that require information technology contracting and contract management services. The DITCO also establishes large contract vehicles available to DoD for essential IT services such as cyber security, information assurance, enterprise license agreements, engineering, hardware, equipment, software integration and support, DISN access, and Non-DISN telecommunications circuits. Non-DISN telecommunications circuits and systems are ordered on an individual basis and are fully reimbursed by customers. In addition, the Enterprise Acquisition Services component encompasses a variety of support services to meet information technology contract requirements and provides contract support to all DISN subscription services.

Enterprise License Agreements provide economies of scale to DoD when purchasing software

licenses. The DISA has assumed a large business volume with relatively small contracting costs, which allows DISA to offer this service at a rate lower than the standard DITCO fee-for-service. Customers will be charged a 0.5 percent rate for utilizing these agreements. This budget reflects significant workload growth, driven primarily by Army and DISA, in FY 2015 and FY 2016.

Operating costs of $126.6 million fund the civilian salaries, accounting support—including large-scale invoice processing—and contracting and financial support systems to execute the IT and telecommunications contracting activities described above. In addition, the operating cost will also fund the sustainment of a new cost accounting system for the TS/EAS business area. The new accounting system will provide additional cost granularity, improve business processes and provide the capability to produce a single set of financial statements for the Information Services Activity Group. All operating costs are recovered via fees charged to customers. For standard contracting services, the fee remains at 2.5 percent in FY 2016.

MAJOR CHANGES BETWEEN FISCAL YEAR ESTIMATES Telecommunications Services/Enterprise Acquisition Services (TS/EAS)

Cost of Operations

($ in millions) FY 2014* FY 2015 FY 2016 FY 2015 President’s Budget $7,088.2 $7,320.9 FY 2016 Current Estimates $6,044.0 $7,084.8 $7,623.5 Change FY 2015 President’s Budget to Current Estimate ($1,044.2) ($236.0) - Change FY 2015 Current Estimate to FY 2016 Current Estimate - - $538.6

*Fiscal Year 2014 data of FY 2016 current estimates are actual results. FY 2015 President’s Budget Submission to FY 2015 Current Estimates Total cost of sales for TS/EAS decreases by -$236.0 million from the FY 2015 President’s Budget and is comprised of the following: A net decrease of -$5.1 million is attributable to changes in cost for DISN Subscription Services. Increases in cost to support customer demand for transport are offset by reductions in network management. Costs increase for DISN reimbursable services by a net total of +$7.6 million. This is primarily driven by an increase of +$39.4 million in customer-funded workload, largely in support of the build-out of Joint Regional Security Stacks (JRSS). Also, costs for the new DoD Enterprise Classified Travel Kit (DECTK) service (+1.8 million) and support for new Air Force-funded Cyber Protection Teams at DISA CONUS (+$2.3 million) are included. These increases are partially offset by decreases in workload estimates for Satellite Services, Cross Domain Services, and Security and Assurance Services to more closely align with current customer demand (-$35.8 million). Finally, workload and operating cost estimates for DISA’s Enterprise Acquisition Services decrease by a net total of -$238.5 million. The primary driver for the reduction is a decrease in customer IT contracting workload, specifically the Encore II contract and Enterprise Licensing Agreements (-$227.0 million). Other reductions include decreases in equipment maintenance contracts (-$3.0 million), a net reduction in civilian pay due to an adjustment to the full-time equivalent utilization rate to more closely align with recent hiring trends (-$3.3 million), and a decrease in operating costs for the new Working Capital Fund Core accounting system due to those costs being reclassified as a capital investment (-$12.8 million). These decreases are partially offset by an increase in customer non-DISN telecommunications contracting requirements and other miscellaneous changes to more closely align with current execution trends (+$7.6 million).

FY 2015 Current Estimate to FY 2016 Current Estimate Costs increase by +$538.6 million from FY 2015 to FY 2016. Of this increase, +$95.3 million is attributable to inflation. The remaining increase is primarily attributable to a net increase in IT contracting workload based on historical trends, expected increases in demand for Enterprise Licensing Agreements (+$485.0 million) and the acquisition workforce to support these contracting efforts (+$2.4 million). Other increases support the customer-funded procurement of Joint Regional Security Stacks (+$59.6 million), customer workload for Satellite Services (+$19.6 million) and Mobility (+$1.9), and other increases in operating costs primarily associated with the new Working Capital Fund Core accounting system (+$1.3 million). These increases are partially offset by a reduction in non-DISN telecommunications contracting workload for the Federal Aviation Administration (-$2.1 million) as well as significant reductions in cost within the DISN Subscription Services that contribute to a 9.3 percent decrease in the FY 2016 DSS share price. Cost reductions within the DISN Subscription Services include: elimination/optimization of legacy technologies (-$46.3 million); significant network security efficiencies primarily driven by the consolidation and streamlining of various contracts (-$19.5 million); optimization of bandwidth contracts (-$17.2 million); reduced costs for the fit out of the new DISA CONUS building at Scott Air Force Base and a corresponding decrease in rental payments (-$16.0 million); network operations contract support efficiencies (-$10.2 million); removal of FY 2015 one-time costs for process improvement efforts (-$6.8 million); planned reductions in costs for server and storage requirements at the DECCs commensurate with the 10 percent composite rate reduction (-$6.0 million); pricing decreases in connection approval support contracts (-$1.2 million); and a reduction in IT equipment and support at DISA CONUS (-$0.8 million). Other miscellaneous costs decrease by -$0.2 million.

Capital Investment Program Summary

($ in millions) FY 2014* FY 2015 FY 2016 Equipment $0.0 $5.8 $0.0 ADPE and Telecom $12.2 $5.6 $1.0 Software $4.8 $27.0 $0.0 Minor Construction $0.0 $0.0 $0.0 Total Program Authority $17.1 $38.4 $1.0 FY 2015 President's Budget $17.6 $15.6 Change FY 2015 President’s Budget to Current Estimates ($0.6) $22.9 - Change FY 2015 Current Estimate to FY 2016 Current Estimate - - ($37.4)

*Fiscal Year 2014 data are actual obligations. Note: DISN network investments are funded separately in DISA's Procurement, D-W account.

FY 2015 President’s Budget to FY 2015 Current Estimates The FY 2015 capital authority increases by $22.9 million, primarily due to the reclassification of costs supporting the new Working Capital Fund Core financial system to the capital investment program. Also, costs increase due to new requirements for the secure handset system upgrade, and the addition of the JHITS battery replacement project and equipment purchases for the new DISA CONUS facility. The secure handset cost increase is necessary to support an NSA requirement to transfer to an enhanced encryption algorithm vice the basic encryption, as originally planned. The JHITS battery project is to maintain backup power. The equipment purchases are required to complete the fit out of a new DISA CONUS facility at Scott AFB, Illinois, and will provide an audio/visual system, security system, and network encryptors. FY 2015 Current Estimates to FY 2016 Current Estimates The FY 2016 capital authority request decreases by $37.4 million primarily due to the completion of planned FY 2015 projects.

Civilian Manpower

($ in millions) FY 2014* FY 2015 FY 2016 Civilian End Strength 1,446 1,623 1,627 Civilian Full Time Equivalents 1,463 1,532 1,558 Civilian Labor Cost $ 182.1 $ 194.1 $ 198.4 *Fiscal Year 2014 data are actual results. Civilian manpower increases from FY 2014 to FY 2015 by 69 full time equivalents (FTEs) and is largely attributable to an increase in Telecommunications Services to support the functional transfer of Cross Domain Enterprise Services, expansion of Unified Capabilities, and an increase to network services support to fill vacant FY 2014 positions due to hiring delays. There is also an increase in contracting officers and cost estimators to support new workload growth for Enterprise License Agreements. Civilian manpower increases by a net of 26 FTEs in FY 2016. This is due to an increase in security personnel at the new DISA CONUS building, additional personnel to support new Mobility workload, and an increase in the acquisition workforce to support increased workload for IT contracting and Enterprise License Agreements.

Military Manpower ($ in millions) FY 2014 FY 2015 FY 2016 Military End Strength 74 82 69 Military Labor Cost $6.6 $5.6 $4.8 *Fiscal Year 2014 data are actual results. The decrease in military end strength from FY 2015 to FY 2016 is largely due to a planned decrease in military manpower for network operations and network services support.


DISA plays a key role in supporting the war fighter and, as a result, is held to high performance standards. In many cases, performance measures are detailed in Service Level Agreements (SLAs) with individual customers that exceed the general performance measures discussed in the remainder of this section. Telecommunications Services Performance Measures The Defense Information Systems Network (DISN) has operating metrics tied to the Department’s strategic goals of information dominance. These operational metrics include the cycle time for delivery of data and satellite services as well as service performance objectives such as availability, quality of service, and security measures. Additionally, the Information Technology Enterprise Services Roadmap sets a DISN performance target of 99.997% operational availability at all Joint Staff-validated locations. The DISA is working to meet the intent of this guidance through the evolving Joint Information Environment architecture and by building out the network as necessary to provide a growing number of enterprise services. These categories of metrics have guided the development of the Telecommunication Services budget submission. Shown below are major performance and performance improvement measures:

SERVICE OBJECTIVE FY 2014 Actual FY 2015 Operational Goal

FY 2016 Operational Goal

Non-Secure Internet Protocol Router Network access circuit availability 99.69% 98.50% 98.50%

Secure Internet Protocol Router Network latency (measurement of network delay) in the continental United States

46 milliseconds Not to exceed 100 milliseconds

Not to exceed 100 milliseconds

DISN Video Services availability 99.97% 99.60% 99.60%

Defense Red-Switch Network switch availability 99.52% 99.50% 99.50%

Enterprise Acquisition Services Performance Measures

The following performance measures apply for Enterprise Acquisition Services (EAS):



Percent of total eligible contract dollars competed 76.84% 78.30% 78.30%

Percent of total eligible contract dollars awarded to small businesses 33.00% 26.00% 26.00%

Rates

DISN Subscription Services Share Price The subsequent table shows changes in the number of sites, shares, total cost and cost per share. As previously discussed, the change in the number of shares is directly correlated to customer demand for services and bandwidth, a key factor in the overall cost of the network. The subscription share price in FY 2016 decreases by 9.3 percent. Shown below are the financial data for DISN Subscription Services. ($ in millions) FY 2014* FY 2015 FY 2016 Revenue $1,304.6 $1,341.3 $1,255.2 Cost $1,220.0 $1,315.4 $1,193.9 Number of Sites 347 339 337 Number of Shares 8,778 8,849 9,129 Annual Price per Share $148,753 $151,579 $137,500 Unit Cost Per Share $138,984 $148,653 $130,780 *Fiscal Year 2014 data are actual results. Security and Assurance Services Security and Assurance Services are priced using three different methodologies based on the services a customer receives:

1. DISN Subscription Services (DSS) share price – costs for services that benefit the entire DISN network and user community will be recovered via the share price.

2. Direct Reimbursement – costs for services performed for a specific customer, such as monitoring sensors on the customer side of a router, will be recovered on a direct-reimbursable basis.

3. Computer Network Defense Service Provider Subscription – customers can choose to sign-up for a yearly subscription package that includes various types of

testing and analysis as well as exercise support and training, as described subsequently:

Service Cost Recovery Mechanism

Command Cyber Readiness Inspections (CCRIs)

DISN Subscription Services: Costs for CCRIs will be recovered through the DSS share price. These inspections ensure compliance at all connected sites and therefore benefit the entire DISN community.

Network Security Monitoring and Incident Reporting

DISN Subscription Services: Costs for sensors that are placed directly on the DISN backbone will be recovered through the DSS share price. The monitoring of these sensors benefits the entire DISN community.

Computer Network Service Assessments

Direct Reimbursement: Customers will be charged these assessments on the technical and non-technical services of a CNDSP.

System & Enclave Certification Direct Reimbursement: Customers will be charged based on the size (small, medium, large) of the enclave/system being certified.

Computer Network Defense Service Provider (CNDSP) Subscription Services

CNDSP Subscription: Each yearly subscription will include recurring System Architecture Analysis & Testing, Trends Analysis, Penetration Testing, Vulnerability Assessment Analysis & Trending, CNDSP Subscriber Services Support, and one (1) each of the following: Incident Response and Recovery Team, Malware Analysis, Media Analysis, CNDSP Exercise Support, and Red Teaming. It will also include two (2) seats per year for IA Training Program Support. Anything over these limits will be charged on a usage basis.

Mission Assurance (MA) Analysis

Direct Reimbursement: Customers can choose any of the IA Analysis services offered and will provide reimbursement for the actual cost of providing the analysis.

DoD Mobility The table below shows the monthly rate per device for DoD Mobility as an enterprise service. The rate recovers costs for enterprise-level mobile communications services, to include access to a DoD Mobile Application Store. The Mobility service is offered at three different security levels; unclassified, secret and top secret. For unclassified services, customers are responsible for purchasing their own approved mobile devices and data/air time plans. Devices for classified use must be purchased through DISA. In accordance with DWCF policy, customers are required to place orders and provide payment for Mobility services. DoD Mobility Rates FY 2014 FY 2015 FY 2016 Unclassified Device $7.36 $7.36 TBD SIPR Device $126.63 $126.63 TBD Top Secret Device $278.05 $278.05 TBD Cross Domain Services

The table below shows the fee for new filter development, new customer pre/post deployment, and the rate per active filter for Cross Domain Services. The fees for new filter development and pre/post deployment are based on the cost to develop, certify and deploy new filters for Structured File Transfer and Web Service functions. Development is a one-time fee per new filter, and pre/post deployment is a one-time fee per each new customer. The monthly active filter rate recovers cross domain technology assessment, security policy enforcement, certification, accreditation and revalidation support, configuration management, help desk support, and life cycle replacement.

Cross Domain Rates FY 2014 FY 2015 FY 2016 Development/New Filter Pre/Post Deployment/New Customer Basic Monthly Rate/Filter

$25,600 $136,320

$5,199

$26,880 $143,136

$5,547

TBD TBD TBD

Commercial Satellite Communications Services DISA charges a standard rate for all Commercial Satellite Services procured on behalf of customers. The rate recovers contracting costs, vendor incentive fees, labor support costs, and a small amount of travel associated with delivering both Fixed Satellite Services and Mobile Satellite Services. Commercial Satellite Services Rates FY 2014 FY 2015 FY 2016 Standard Rate 2.28% 2.16% TBD

Enterprise Acquisition Services Rate The standard fee-for-service contracting rate remains at 2.5 percent in FY 2016. The DISA has established a 0.5 percent rate for customers utilizing Enterprise License Agreement contracts. DISA is able to provide the Department with economies of scale on these large, enterprise licensing contracts, one of the goals of the Department’s IT efficiencies roadmap.

Contracting Rates FY 2014 FY 2015 FY 2016 Standard Fee-for-Service 2.00% 2.50% 2.50% Enterprise License Agreement Services 0.50% 0.50% 0.50%

FY 2014 Actual $6,044.020

FY 2015 Estimate in President's Budget $7,320.857

Efficiencies:Reduction in network management costs to more closely align with FY 2014 execution ($20.932)Equipment maintenance reduction due to decreases in functional and technical support contract and elimination of sustainment for legacy order entry system ($3.026)

Net reduction in civilian pay due to adjustment in utilization rate to more closely align with historical hiring lag at the Defense Information Technology Contracting Organization (DITCO)

($3.262)

Program Changes:Net decrease in customer IT contracting workload primarily due to reduced requirements for Encore II contracts and Enterprise Licensing Agreements ($227.018)

Reduced workload estimates primarily for Satellite Services, Cross Domain Services, and Security and Assurance Services to more closely align with current customer demand

($35.808)

Decreased operating costs for new Working Capital Fund Core accounting system ($12.820)Increased customer funded workload, primarily associated with Joint Regional Security Stacks (JRSS) requirements $39.425

Increased bandwidth requirements to support customer demand for transport $16.126 Increase in customer non-DISN telecommunications contracting requirements to align with actual FY 2014 execution $7.130

Increased cost to support new Air Force Cyber Protection Teams at DISA CONUS $2.252 Increased cost to support a new secure IP communications capability, the DoD Enterprise Classified Travel Kit (DECTK) $1.750

Miscellaneous $0.172

FY 2015 Current Estimate $7,084.846



TELECOMMUNICATIONS SERVICES AND ENTERPRISE ACQUISITION SERVICESFebruary 2015






Pricing Adjustments:Non-labor Inflation $92.877 Civilian/Military Pay Raise $1.927 Annualization of Civ/Mil Pay Raise $0.499

Efficiencies:Elimination/optimization of legacy technolgies and continued transition to IP convergance:

▪ Elimination of legacy DISN Asynchronous Transfer Mode Services (DATMS);▪ Elmination of legacy Integrated Services Digital Network (ISDN);▪ Optimization of legacy Time-Division Multiplexing (TDM);▪ Optimization of Promina network

Reduction in transport costs due to optimization of bandwidth utilization and transition to more cost effective circuit leases ($17.238)

Network operations contract support efficiencies primarily associated with a reduction in personnel that provide manual provisioning and troubleshooting activities ($10.238)

Contract efficiencies for Host Based Security System (HBSS) and Public Key Infrastructure ($9.337)

Removal of FY 2015 one-time contract costs for process improvement efforts ($6.805)Reduction in DECC bill due to Computing Services 10% composite rate reduction ($5.997)Reduction in enclave sensors due to planned architectural changes associated with the implementation of Joint Regional Security Stacks (JRSS) ($2.500)

Reduction in the number of Command Cyber Readiness Inspections (CCRIs) conducted ($2.212)Reduced network security costs from the elimination of two NIPRNet Federated Gateways (NFG) ($2.200)

Pricing decrease in contract providing support for the DISN connection approval process ($1.249)Other network security efficeiencies associated with consolidation and streamlining of contracts ($3.251)

Reduction in IT equipment and support at DISA CONUS ($0.781)

Program Changes:Reduced costs for the fit out of a new DISA CONUS building at Scott AFB ($15.802)Reduction in non-DISN telecommunications contracting workload for the Federal Aviation ($2.148)Reduction in rental payments to GSA as new DISA CONUS building is completed ($0.219)Net increase in customer IT contracting workload based on historical trends and expected increases in demand for Enterprise Licensing Agreements $485.005

Increased customer funded workload, primarily associated with Joint Regional Security Stacks (JRSS) requirements $59.581

Increased customer workload for Satellite Services $19.637 Increase in civilian pay primarily to support workload for IT contracting and Enterprise Licensing Agreements $2.388

Increased workload for Mobility services $1.885 Increase in DITCO operating costs primarily to support to Working Capital Fund accounting system $1.268

Miscellaneous ($0.166)

FY 2016 Estimate $7,623.457


($46.314)

FY 2014 Quantity FY 2014 Total Cost FY 2015 Quantity FY 2015 Total Cost FY 2016 Quantity FY 2016 Total Cost

Non-ADPE Equipment 0.000 $0.000 3.000 $5.800 0.000 $0.000

DISA CONUS Fit Out 0.000 $0.000 3.000 $5.800 0.000 $0.000

ADPE & Telecom Equipment Capabilities 2.000 $12.236 3.000 $5.621 1.000 $1.007

Other Support Equipment 2.000 $12.236 3.000 $5.621 1.000 $1.007

EMSS Remote Earth Terminal 1.000 $0.373 0.000 $0.000 0.000 $0.000

EMSS FANS 0.000 $0.000 0.000 $0.000 1.000 $1.007

Secure Handset System Upgrade 0.000 $0.000 1.000 $2.000 0.000 $0.000

JHITS Battery Plant Replacement 0.000 $0.000 1.000 $0.446 0.000 $0.000

EMSS Gateway Transformation 1.000 $11.863 1.000 $3.175 0.000 $0.000

Software Development 1.000 $4.836 2.000 $27.000 0.000 $0.000

Externally Developed Software 1.000 $4.836 2.000 $27.000 0.000 $0.000

New Financial System 0.000 $0.000 1.000 $25.000 0.000 $0.000

Traditional Contract Writing System 1.000 $4.836 1.000 $2.000 0.000 $0.000

Minor Construction 0.000 $0.000 0.000 $0.000 0.000 $0.000

Total 3.000 $17.072 8.000 $38.421 1.000 $1.007

Total Depreciation Expense $12.822 $15.292 $15.823

Total Capital Outlays $17.768 $10.967 $26.424

Activity Group Capital Investment SummaryDefense Information Systems Agency



Exhibit Fund 9a - Activity Group Capital Investment Summary

TS/EAS / February 2015

FY 2014 FY 2014 FY 2014 FY 2015 FY 2015 FY 2015 FY 2016 FY 2016 FY 2016Element of Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost

0.00 0.00 0.00 1.00 0.446 0.446 0.00 0.00 0.00Total 0.00 0.00 0.00 1.00 0.446 0.446 0.00 0.00 0.00

Description and Purpose:

Current Deficiency and/or Problem:

Impact:

C. ADPE and Telecom - Equipment D. JHITS Battery Plant Replacement

Telecommunication Services/Enterprise Acquisition Services: A. Fiscal Year 2016 Capital Investment Justification

($ in thousands)

Exhibit Fund 9b - Capital Investment Justification

The battery plant provides the first source of backup power for the ten DISA-owned JHITS switches during a commercial power outage. If the batteries fail to hold power to the switches during a commercial power outage, the Government backup generator system (72-hour backup) will not kick in. Once there is a power source denial to the switches, the switch will go down hard with no automatic restoral capabilities. For some of the unmanned switch sites (like Schofield, Fort Shafter, Kaneohe), a switch technician must physically re-boot the switch at the respective switch central office which could take extensive time to implement especially during non-duty hours. Failed power to a switch could also damage the switch equipment and components rendering the switch inoperable and in need of replacement.

JHITS Battery Plant Replacement

Narrative Justification:

At each JHITS Swiching System site, there is an installed battery plant used to provide backup voltage (-48vdc) to maintain switch operation for 8 hours in the event of loss of commercial power. These battery plants were installed in 1997-1998 during the installation of the HITS program. These batteries have been in continuous operation since that time and are beginning to show signs of aging. For some of the switches, the battery plant is no longer supportable and incapable of operating at the performance levels recommended by the manufacturer. This Government-owned battery plant must be replaced to protect switching equipment and the JHITS switch performance (ten switches) in the event of commercial power outages which occur frequently in Hawaii with higher risks that prevail during the hurricane season from May through November each year.

The installed batteries supporting the JHITS switching system are classified as Valve-Regulated Lead Acid (VRLA) batteries and are specifically designed for long backup needs of telecommunications applications. They have a specific designed battery life of 20 years with reduced floor space and ventilation requirements when compared to the typical lead acid batteries. The JHITS switching system batteries have significantly degraded and will not support the required load that they were designed for. The original design requirements were for 8 hours capacity to support full switch operation. The actual capacity can’t be determined without a full load test. Given the state of the batteries, a load test may be risky and could cause a switch outage and is not recommended. Since most of the batteries at each site are showing significant deterioration, the only action is to replace the entire battery plant. One for one replacement of individual cells is not recommended.



0.00 0.00 0.00 1.00 2,000.00 2,000.00 0.00 0.00 0.00Total 0.00 0.00 0.00 1.00 2,000.00 2,000.00 0.00 0.00 0.00



Impact:


C. ADPE and Telecom - Equipment D. Secure Handset System Upgrade


($ in thousands)

If the project is not supported, the DoD will lose its ability to provide secure ISM's and ultimately secure voice capability for new handsets. Due to the long lead time, this will impact communications in either the 2016 or 2017 timeframe.

Secure Handset System Upgrade


This funding will support the new secure satellite phone that will be needed to replace the obsolete 9505A secure phone which has been off of the commercial market for eight years, yet we continue to support this phone because of the Type I encryption for Secret and Top Secret voice capability that this phone supports. General Dynamics has agreed to support the 9505A, but because the parts are obsolete the phone is extremely expensive to maintain. The EMSS program currently has 29,175 phones today with approximately another 10,000 phones inactive. These phones are critical communications devices for the executive branch, DoD users, and the intelligence community. Added capabilities to the new phone include GPS as well as a personnel location and identification (PLI) “panic button” which once pressed will send an emergency message to the DoD mission management center alerting them that someone is in danger or needs help, a feature that can ultimately save many lives. The out-of-cycle request is needed because the original estimate was based on the NSA allowing the continued use of the Basic Firefly (BFF) encryption algorithm. Based upon guidance received from the NSA in July 2014, we must transition to the Enhanced Firefly (EFF) encryption. This has significantly increased the amount of work that the contractor must perform. Previous estimates were based on the FOSH being an Engineering Change Proposal (ECP) being submitted to the NSA for approval. The EFF algorithm requires a new certification package. The additional level of encryption necessary is estimated to increase the cost by $2M.

The current force phone is over 8 years old and is no longer supported on the commercial market. DoD is paying General Dynamics tosupport this phone indefinitely, which is cost prohibitive due to the need for parts that have to be specially made since they are no longerin production.



1.00 11,863.00 11,863.00 1.00 3,175.00 3,175.00 0.00 0.00 0.00Total 1.00 11,863.00 11,863.00 1.00 3,175.00 3,175.00 0.00 0.00 0.00



Impact:

C. ADPE and Telecom - Equipment D. EMSS Gateway Transformation


($ in thousands)


If the EMSS Gateway is not transformed to remain compatible with the Iridium commercial gateway, EMSS will not be able to receive critical operational traffic nor provide access to new services offered by Iridium NEXT. Without upgrades to the DoD Gateway infrastructure, end user equipment, encryption devices, and COOP capability will not meet communications needs.

EMSS Gateway Transformation


The Enhanced Mobile Satellite Service (EMSS) provides deployed Warfighters and Partnering Agencies global communications through enhancements to commercial Mobile Satellite Service (MSS) infrastructures. Services provided include voice, data (2.4kbps), paging, and Short Burst Data. Major functions include airtime usage via the Iridium Low Earth Orbit (LEO) constellation, Operations and Maintenance (O&M) of the DoD EMSS Gateway, Customer provisioning, and engineering assistance. In order to ensure continued reliable service the EMSS Gateway is undergoing modernization and upgrades.

Due to the aging EMSS terrestrial architecture, infrastructure and equipment, which has been in service since the commencement of the program, is becoming unsupportable. The current EMSS DoD Gateway was procured to receive traffic from the current Iridium constellation. As Iridium transitions their commercial service to utilize "Iridium NEXT" technology, their commercial gateway architecture must change. Iridium Satellite LLC (ISLLC) has initiated an effort (Iridium NEXT) to replace the aging constellation. To ensure the government's continued ability to receive EMSS/Iridium traffic, the EMSS Gateway will need to be migrated to maintain technical parallel via a series of upgrades designed to maintain full backward compatibility and be fully NEXT compliant. This transformation began in FY 2010 and is expected to continue through FY 2016.



0.00 0.00 0.00 0.00 0.00 0.00 1.00 1,007.00 1,007.00 Total 0.00 0.00 0.00 0.00 0.00 0.00 1.00 1,007.00 1,007.00



Impact:

Capital Investment JustificationTelecommunication Services/Enterprise Acquisition Services: A. Fiscal Year 2016

C. ADPE and Telecom - Equipment D. EMSS Future Air Navigation System (FANS)


Future Air Navigation System

($ in thousands)


The purpose of the following requirement is to establish the Future Air Navigation System service within the EMSS Gateway. The Enhanced Mobile Satellite Service (EMSS) provides deployed Warfighters and Partnering Agencies global communications through enhancements to commercial Mobile Satellite Service (MSS) infrastructures. Services provided include voice, data, paging, and Short Burst Data. In order to ensure continued reliable service, the EMSS Program Office has developed and is implementing a modernization program for the DOD EMSS Gateway. Additionally, the primary contractor, Iridium Satellite LLC (ISLLC), has initiated an effort (Iridium NEXT) to replace the aging constellation. ISLLC intends to transition the existing Gateways (one commercial, one DoD) to a new architecture via a series of upgrades designed to maintain full backward compatibility, prepare for subsequent upgrades, and be fully NEXT compliant. Future Air Navigation System: FANS Over Iridium (FOI) offers aircraft an assured, cost efficient means, to obtain flight services to include weather, flight plans, aircraft health and aircraft status through Iridium/EMSS Short Burst Data (SBD) devices. Global coverage is provided via the Iridium constellation.

Utilizing EMSS allows for 24x7 operations management, performance management and information assurance required by DoD and Federal Government Departments and Agencies. This upgrade to the EMSS infrastructure will enable DISA to provide FOI to DoD and Federal Agencies.

In 2011 the Federal Aviation Administration (FAA) approved and certified FOI as a viable part of the Aircraft Communications Addressing and Rporting System (ACARS). This system provided short message transmissions between aircraft and the ground stations via radio or satellite. ACARS also provides commercial Communications, Navigation, Surveillance/Air Traffic Management (CSN/ATM) compatibility worldwide; flight safety data to include weather, flight plans, aircraft health and status. This has helped aircraft streamline flight routes and cut fuel consumption.

The Air Force Mobility Command (AMC) currently operates ACARS under contract number HC1013-10-D-2002 with the Aeronautical Radio, Incorporated (ARINC). This contract expires 31 August 2016. The ARINC maintains FAA certification to provide ACARS to commercial aircraft. AMC operates on a current waiver to utilize commercial services until a viable solution can be found via government assets. Since EMSS is the only government entity that offers Iridium services, establishing a Future Air Navigation System (FANS) network with ARINC would not only solve AMC’s issue but the system could be utilized by all DoD and other government aircraft.



1.00 4836.00 4836.00 1.00 2,000.00 2,000.00 0.00 0.00 0.00Total 1.00 4836.00 4836.00 1.00 2,000.00 2,000.00 0.00 0.00 0.00



Impact:


C. Software Development D. Traditional Contract Writing System


Traditional Contract Writing System

($ in thousands)

On 24 March 2005, DISA-PLD/DITCO received authorization from the DoD Business Management Modernization Program (BMMP) to replace incongruous and unsupported legacy contracting applications with a modern end-to-end system now called the Integrated Defense Enterprise Acquisition System (IDEAS). The Enterprise Business Modernization (EBM) project was subdivided into telecommunications and traditional contracting and uses an agile methodology to incrementally configure Appian's Inc Business Process Management (BPM) tool to support all procurement functions. IDEAS adheres to the DoD Procurement Data Standard (PDS) and Standard Financial Information Structure (SFIS), has been certified Business Enterprise Architecture (BEA) compliant, and is documented using the Department of Defense Architecture Framework (DoDAF). Receiving its Authority to Operate (ATO) in 3QFY09, IDEAS provided telecommunications contracting capability first. Funding is required to deploy traditional contracting capability which is the next step in the incremental progression towards a fully integrated contract writing system. The traditional contracting solution shall be configured utilizing Appian's BPM tool to provide the flexibility, access controls, and interfaces necessary in providing a streamlined system inclusive of all procurement functions. DISA is currently licensed to configure IDEAS for Telecommunications and Traditional Contracting for 5000 users. IDEAS is a single web-based contract writing system which manages all pre-award, award, and post-award activities. Telecommunications contracting was implemented first and has processed over 19,200 contract actions by 150 contracting specialists and officers, with a life cycle value just over $1.6B. Traditional contracting is the next step towards replacing costly and unsupportable legacy systems, providing the full spectrum of contracting capabilities within a single integrated system, and replacing the Standard Procurement System (SPS) which is scheduled to sunset in FY15.

Failure to replace DISA contract writing systems before the sunset of SPS/PD2 will result in an interruption of DISA's ability to contract for essential Information Technology products and services required by DISA's mission partners.

OSD AT&L Department of Defense (DoD) Functional Contract Writing and Administration Capabilities Memo dated 21 October 2011 declared FY 2015 as the end-of-life for the SPS/PD2. Therefore, the EBM/IDEAS Traditional Contract Writing System project must start immediately to be in place before the legacy system sunsets in FY 2015.




0.00 0.00 0.00 1.00 25,000.00 25,000.00 0.00 0.00 0.00Total 0.00 0.00 0.00 1.00 25,000.00 25,000.00 0.00 0.00 0.00



Impact:


C. Software Development D. New Financial System


($ in thousands)

Upon implementation of the new financial system, DISA will be in compliance with the DoD mandated solution for working capital fund accounting & finance, the latest version of Business Enterprise Architecture (BEA), the Financial Management Regulation (FMR), Office of Management and Budget compliance objectives, and other applicable policies, laws and regulations. The current proprietary program will be replaced with a non-proprietary solution, allowing DISA to more freely pursue open competition options in future contractual activities. Many of the manual processes in the current solution will be replaced by automated functions, enhancing user efficiency. It is anticipated that the new TSEAS financial system will provide DISA with the opportunity to improve business processes, increase standardization and identify efficiencies with interfaces that allow for the best use of resources across all areas. It is also anticipated that the new TSEAS financial system will provide capabilities that will reduce manual, off-line efforts necessary to perform functions in the current environment as well as establish standardized cost structures across the DWCF entities providing better visibility of cost and revenue information from an enterprise perspective.

New Financial System


The purpose of this project is to develop a new TSEAS financial system which will modernize the current FAMIS TSEAS system. The new TSEAS financial system will be fully compatible with the Working Capital Fund-Core system deployed in support of the Computing Services business area and will allow production of an integrated financial statement for the Information Services Activity Group. The new TSEAS financial system is a turn-key solution designed to upgrade from the current version. This solution will support the following application family of products: General Ledger, Accounts Receivable, Accounts Payable, Federal Administration, Project Costing, Project Billing, Project Contracts, Purchasing, and iProcurement. The resulting system will implement Oracle Identity and Access Management (IAM) to interface with EBS to provide Common Access Card (CAC) authentication to the EBS. Both the operational and the back-up environments for this solution will be hosted at DECCs.

The Federal Financial Management Integrity Act (FFMIA) of 1996 requires Federal agencies to implement and maintain financial management systems compliant with Federal financial management systems requirements, applicable Federal accounting standards, and the United States Standard General Ledger (USSGL) at the transaction level. The Office of Management and Budget (OMB) issued Circular 127, Financial Management Systems (revised 1/9/2009), to implement FFMIA and establish specific requirements for Federal financial systems.



0.00 0.00 0.00 1 3,400.00 3,400.00 0.00 0.00 0.00Security System 0.00 0.00 0.00 1 1,800.00 1,800.00 0.00 0.00 0.00Crypto Gear 0.00 0.00 0.00 1 600.00 600.00 0.00 0.00 0.00Total 0.00 0.00 0.00 3 1,933.33 5,800.00 0.00 0.00 0.00



Impact:

The current facility does not meet the minimum criteria for the Defense Threat Reduction Agency (DTRA). The facility has a failure rating for force protection and is in direct violation of current airfield safety criteria. The facility does not meet the current American Disabilities Act (ADA) requirements and has received low marks from the Inspector General (IG) for quality of life issues. The facility fails to meet minimum standards for structural design to prevent collateral collapse. Single points of failure exist in the HVAC system resulting in the risk of system failures that will directly impact support for the warfighter. Expansion of the airfield over the past 30 years has impacted the current location. The facility operates under airfield waivers. The inadequate stand-off distance from the flightline requires this facility to be vacated or operate under special provisions during airshows and major airfield operations.

DISA CONUS has evolved into a critical NetOps center, which currently monitors and manages 83% of the DISN bandwidth, 75% of DISN devices, 86% of customer services, and assures 100% of the NIPRNet. In mission scope and volume, DISA CONUS has become a unique and primary host for critical network operations support to National Leaders, Services and Agencies, eleven Combatant Commands, and DISA. The CONUS AOR span of control comprises 645 DISN nodes, 3,280 service locations, all inter-theater connectivity, 15 Network Operation Centers (NOCs), and OPCON of 4 non-collocated NOCs. Without this project, DISA risks losing command and control (C2) of critical elements of the DISA networks. Without this project, the new DISA CONUS facility would not be able to support sensitive spaces and would be vulnerable to outside intrusion to classified documentation.


A/V Suites and Associated Equipment

Narrative Justification:The DISA CONUS mission at Scott AFB is spread between three geographically separated locations. The primary facility for network operations and engineering is located on base in building 3189. Circuit implementations are performed on an off-base leased facility in O'Fallon, IL. The dynamic growth of informational systems to support the global missions of the warfighter have rendered building 3189 an obsolete antiquated facility with a long list of facility deficiencies. A new facility was approved for construction in the FY 2013 MILCON budget for the DoD, and project VDYD597032 was awarded through the Corps of Engineers Louisville District in FY 2013. The project will require the integration of installed equipment to building infrastructure before DISA occupies the building, which is scheduled for completion in January 2016.

The purpose of the funds is to provide a security system, network encryptors, and a major audio-visual systems with a wide array of display devices for the various conference and break rooms to support the new DISA CONUS (MILCON) Facility. The building has multiple areas that require special security requirements to meet classified material standards. These systems include a Video Surveillance System (VSS) and an Electronic Security System (ESS). These systems work in conjunction to provide a visual and physical intrusion detection system for the new facility. The audio-visual systems and displays will be used for meetings, conferences, personnel notifications and a variety of other mission needs. The facility also requires KG-175D, TACLANE Inline Network Encryptors (INE) to meet the National Security Agency (NSA) requirements for High Assurance Internet Protocol Encryptor (HAIPE). These devices provide network communications security on Internet Protocol (IP) and Asynchronous Transfer Mode (ATM) networks for the individual user or for enclaves of users at the same security level. These are centrally managed investment items and the facility requires 60 to protect all the circuits at a unit cost of $10K each.

C. Non ADPE and Telecom - Equipment D. Security System for DISA CONUS MILCON facility


($ in thousands)

Fiscal Year Major Category Initial Request Current Proj. Cost Approved Change ExplanationFY 2014

Equipment - ADPE and Telecommunications 12.623 12.236 (0.387)

Software Development 5.000 4.836 (0.164)

TOTAL FY 2014 17.623 17.072 (0.551) Current project cost reflects actual prior year obligations.

FY 2015Non-ADPE Equipment 0.000 5.800 5.800 Capital required to support the fit out of a new building at

Scott AFB, IL. Includes cost for Audio/Visual suites, a security system, and crypto gear.

Equipment - ADPE and Telecommunications 3.175 5.621 2.446 Pricing for the EMSS secure handset system upgrade has increased primarily due to new encryption requirements (+$2.000). Also, the battery plant supporting the JHITS switching system requires replacement due to earlier than expected degradation (+$0.446).

Software Development 12.384 27.000 14.616 Increase of $14.616 for the new Working Capital Fund core accounting system

TOTAL FY 2015 15.559 38.421 22.862

FY 2016Equipment - ADPE and Telecommunications 1.007 1.007 0.000 New requirement -- EMSS Future Air Navigation System

TOTAL FY 2016 1.007 1.007 0.000

Defense Information Systems AgencyCapital Budget Execution

Exhibit Fund 9c - Capital Budget Execution

(Dollars in Millions)February 2015

TELECOMMUNICATIONS SERVICES AND ENTERPRISE ACQUISITION SERVICES




2014 2015 2016

1. New Orders

a. ORDERS FROM DoD COMPONENTS $5,263.466 $6,189.360 $6,757.245

ARMY APPROPRIATED $1,764.563 $2,050.090 $2,171.108

Army O&M $1,438.662 $1,479.424 $1,560.415

Army RDT&E $71.405 $96.487 $98.246


Army MILCON $0.054 $0.086 $0.088

Army BRAC $0.000 $0.000 $0.000


Navy O&M $618.956 $548.909 $546.748

Navy RDT&E $5.877 $6.604 $6.738


Navy MILCON $0.793 $0.721 $0.735

Navy BRAC $0.000 $0.000 $0.000


Marine Corps O&M $52.412 $109.616 $108.181





AIR FORCE APPROPRIATED $1,174.249 $1,239.192 $1,281.381

AF O&M $1,174.249 $1,235.700 $1,277.849

AF RDT&E $0.000 $0.000 $0.000

AF Procurement $0.000 $0.700 $0.700

AF MILCON $0.000 $0.000 $0.000

AF BRAC $0.000 $2.792 $2.832

DISA APPROPRIATED $1,186.499 $1,732.475 $2,084.065

DISA O&M $929.542 $1,329.832 $1,673.053

DISA RDT&E $158.615 $185.346 $189.209


DISA MILCON $0.000 $0.000 $0.000

DISA BRAC $0.000 $0.000 $0.000












2014 2015 2016







ARMY - WCF $0.249 $0.072 $0.073


NAVY - WCF $38.644 $47.919 $48.860







AIR FORCE - WCF $27.369 $38.948 $39.681



DEFENSE WIDE WCF $690.206 $731.993 $746.184








DECA Operations $20.847 $18.467 $18.760

DECA Resale $0.000 $0.549 $0.558






PRMRF/BMF $0.000 $0.000 $0.000

c. TOTAL DoD ORDERS $6,040.966 $7,027.684 $7,611.744

d. OTHER ORDERS $123.097 $118.328 $116.294





2014 2015 2016


TRUST FUNDS $23.720 $26.368 $26.917



TOTAL NEW ORDERS $6,164.063 $7,146.012 $7,728.038

2. Carry In Orders $0.000 $0.000 $0.000

3. TOTAL GROSS ORDERS $6,164.063 $7,146.012 $7,728.038





2014 2015 2016

Revenue

Gross Sales $6,164.063 $7,146.012 $7,728.038

Operations $6,151.242 $7,130.720 $7,712.215


Depreciation $12.821 $15.292 $15.823

Other Income $0.000 $0.000 $0.000


Total Income: $6,164.063 $7,146.012 $7,728.038

Costs







Equipment $0.000 $0.000 $0.000






Rent, Comm, Utilities, & Misc. Charges $1,698.219 $1,629.619 $1,643.474

Other Purchased Services $4,048.043 $5,037.291 $5,548.923

Total Costs $6,044.020 $7,084.846 $7,623.457

Operating Results $120.043 $61.166 $104.581





Other Adjustments Affecting NOR $0.000 $0.000 ($62.005)

Net Operating Results $120.043 $61.166 $42.576

Prior Year AOR $140.000 $265.299 $97.392

Other Changes Affecting AOR $5.256 $0.000 $0.000

Total AOR $265.299 $326.465 $139.968

Retained AOR $0.000 $229.073 $110.190


AOR for Budget Purposes $265.299 $97.392 $29.778





2014 2015 2016

1. New Orders

a. ORDERS FROM DoD COMPONENTS $503.423 $651.393 $663.613

ARMY APPROPRIATED $104.577 $167.056 $180.072

Army O&M $101.654 $166.496 $179.533

Army RDT&E $0.523 $0.533 $0.516


Army MILCON $0.000 $0.000 $0.000

Army BRAC $0.000 $0.000 $0.000


Navy O&M $34.684 $44.385 $41.643

Navy RDT&E $0.049 $0.013 $0.013


Navy MILCON $0.000 $0.000 $0.000

Navy BRAC $0.000 $0.000 $0.000


Marine Corps O&M $30.574 $28.007 $33.258





AIR FORCE APPROPRIATED $111.801 $166.582 $139.057

AF O&M $100.004 $159.251 $132.348

AF RDT&E $11.679 $7.331 $6.709

AF Procurement $0.118 $0.000 $0.000

AF MILCON $0.000 $0.000 $0.000

AF BRAC $0.000 $0.000 $0.000

DISA APPROPRIATED $105.101 $118.621 $107.742

DISA O&M $102.431 $116.181 $105.351

DISA RDT&E $2.614 $2.417 $2.378


DISA MILCON $0.000 $0.000 $0.000

DISA BRAC $0.000 $0.000 $0.000












2014 2015 2016







ARMY - WCF $1.727 $1.761 $1.642


NAVY - WCF $18.212 $15.200 $16.131







AIR FORCE - WCF $34.463 $32.320 $29.654



DEFENSE WIDE WCF $391.114 $394.995 $378.502








DECA Operations $0.001 $0.583 $0.568

DECA Resale $0.000 $0.000 $0.000






PRMRF/BMF $0.000 $0.000 $0.000

c. TOTAL DoD ORDERS $950.146 $1,097.718 $1,091.390

d. OTHER ORDERS $5.507 $5.923 $5.823





2014 2015 2016


TRUST FUNDS $0.000 $0.000 $0.000



TOTAL NEW ORDERS $955.653 $1,103.641 $1,097.213

2. Carry In Orders $0.000 $0.000 $0.000

3. TOTAL GROSS ORDERS $955.653 $1,103.641 $1,097.213





2014 2015 2016

Revenue

Gross Sales $955.653 $1,103.641 $1,097.213

Operations $939.144 $1,082.590 $1,068.480


Depreciation $16.509 $21.051 $28.733

Other Income $0.000 $0.000 $0.000


Total Income: $955.653 $1,103.641 $1,097.213

Costs







Equipment $0.000 $0.000 $0.000






Rent, Comm, Utilities, & Misc. Charges $274.191 $306.351 $279.270

Other Purchased Services $409.377 $503.540 $515.280

Total Costs $958.755 $1,099.273 $1,097.217

Operating Results ($3.102) $4.368 ($0.004)





Other Adjustments Affecting NOR $0.000 $0.000 $0.000

Net Operating Results ($3.102) $4.368 ($0.004)

Prior Year AOR ($24.887) ($34.142) ($29.774)


Total AOR ($34.142) ($29.774) ($29.778)

Retained AOR $0.000 $0.000 $0.000


AOR for Budget Purposes ($34.142) ($29.774) ($29.778)



Defense Working Capital Fund Telecommunications Services/Enterprise Acquisition Services (TS/EAS)


The Telecommunications Services component of the Information Services Activity Group provides a set of high quality, reliable, survivable, and secure telecommunications services to meet the Department’s command and control requirements. The major component of Telecommunications Services is the Defense Information Systems Network (DISN). The DISN provides the interoperable telecommunications connectivity and value-added services required to plan, implement, and support operational missions through dynamic routing of voice, data, text, imagery (both still and full motion), and bandwidth services. The robustness of this telecommunications infrastructure has been demonstrated by DISA’s repeated ability to meet terrestrial and satellite surge requirements in Southwest Asia while supporting disaster relief and recovery efforts throughout the world. Overall, the DISN provides a lower customer price through bulk quantity purchases, economies of scale and reengineering of current communication services. Some of the DISN services are provided to customers in pre-defined packages and sold on a subscription basis, while other services are sold individually on a cost reimbursable basis. This submission includes significant efforts to reduce information technology and telecommunications costs across the Department, including partnering with Army to implement Joint Regional Security Stacks, continued elimination of legacy systems and replacement with IP-based services, and efficiencies in network security requirements across the DISN. These efforts are discussed in detail on the following pages. The Enterprise Acquisition Services component is the Department’s ideal source for procurement of best-value and commercially competitive information technology. Enterprise Acquisition Services provides contracting services for information technology and telecommunications acquisitions from the commercial sector and provides contracting support to the DISN programs, as well as to other DISA, DoD, and authorized non-Defense customers. This budget reflects significant projected workload growth for Enterprise Licensing Agreements (ELAs). Although customer adoption of ELAs had been slower than expected in FY 2014, growth in this area is expected and will enable the Department to capitalize on economies of scale for software purchases.

Telecommunications Services/Enterprise Acquisition Services (TS/EAS) Key Budget Data

($ in millions) FY 2014* FY 2015 FY 2016 Revenue $6,164.1 $7,146.0 $7,728.0 Cost $6,044.0 $7,084.8 $7,623.5 Net Operating Result $120.0 $61.2 $104.6 Other Factors Affecting NOR** $0.0 $0.0 ($62.0) Prior Year Accumulated Operating Results (AOR) $145.3 $265.3 $97.4 Total AOR $265.3 $326.5 $140.0 Retained AOR $0.0 $229.1 $110.2 Total Retained AOR $0.0 $229.1 $339.3 AOR for Budget Purposes $265.3 $97.4 $29.8 Capital Budget $17.1 $38.4 $1.0 Civilian Work years 1,463 1,532 1,558 Military End Strength 74 82 69

*Fiscal Year 2014 data are actual results. ** JRSS sustainment added to DSS only recognized revenue not cost. Cost will be recognized at a later date. The table above provides a summary of the major financial accounts and personnel levels in this budget request. All data are best estimates of anticipated customer workload, the resulting Defense Working Capital Fund (DWCF) costs, and profit/loss. As discussed in the overview narrative, our business areas continue to evolve and become interdependent cost centers of an integrated technical architecture. Therefore, DISA assesses profit/loss factors holistically for rate setting purposes. This approach minimizes rate fluctuations. In FY 2015 and FY 2016, stabilized rates are set to recapitalize the cash corpus of the fund and improve DISA's unobligated balance. As shown in the above summary chart for Telecommunication Services/Enterprise Acquisition Services, DISA plans to retain $339.3 million of accumulated operating results through FY 2016. This retained AOR will allow DISA to remain operationally flexible as new requirements such as Government-wide Accounting (GWA) and associated daily cash reporting will increase the volatility of cash levels. Additional details on TS/EAS operating cost and rates are discussed in later sections.

Telecommunications Services Program Structure The table below illustrates DISA’s telecommunication service offerings and the major cost centers that support those offerings:

DISN Program Element Program Function Program Sub-Function Product Offering/Description

Defense Switched Network (DSN)Defense Red Switch Network (DRSN)

Non-Secure Internet Protocol Network (NIPRNet)Secure Internet Protocol Network (SIPRNet)Joint Worldwide Intelligence Communications System (JWICS)DISN Leading Edge Services (DISN-LES) - testing network

AccessBackbone

WarehousingMinor EquipmentInstallationOther Sustaining Activities

Enterprise Cross Domain ServicesNetwork Operations of Enterprise InfrastructureNetwork HardeningPKI and DirectoriesSecure Configuration Management

Network Security MonitoringCommand Cyber Readiness Inspections (CCRIs)

Voice Services

Mission AssuranceSecurity and Assurance

Transport Support

Ensures hardware and software acquired from multiple sources functions with like products.

Video

Real Time Services

Reimbursable legacy technologies (e.g., ATM and ISDN)

Joint Regional Security Stack (JRSS)

Other Services

Satellite Services

Mission Assurance

Joint Regional Security Stack (JRSS)Security and Assurance


Maintenance

Information Assurance Activities

Operational Support Services


Customer Support Services

Connection Approval Office

Network Services Support

Public Key Infrastructure (PKI)

Network Oversight

DoD COOP Integrated Network (DCIN)Circuit Integration Support

Customer Funded Projects (CFP)

Joint Hawaii Information Transfer System (JHITS)Commercial Satellite Services (COMSAT)

Core Sustaining Activities

MobilityOrganizational Messaging

DoD Enterprise Classified Travel Kit (DECTK)

DISN SUBSCRIPTION SERVICE

Cross Domain Services (CDS)

Enhanced Mobile Satellite Services (EMSS)Mobile Satellite Service Broadband Global Access Network (MSS BGAN)

Centralized Services

Theater Network Operations

OTHER TELECOM SERVICES

Voice

Data

Interoperability

Transport

Bandwidth Management

DISN Subscription Services

Highlights: This submission includes a reduction to DISN Subscription Services costs in FY 2016. These cost savings, combined with prior year operating results and lower FY 2015 costs, result in a 9.3 percent reduction in the FY 2016 DISN Subscription Share Price. Details of how the savings will be achieved are discussed below. The DISN Subscription Services consist of the following: Transport Services provide a robust worldwide capability to transmit voice, video, data and

message traffic for the Combatant Commanders, Military Departments and Defense Agencies. Transport Services provide the information transport for other services described subsequently, as well as for specialized services. This budget reflects much of DISA’s key initiatives like expanding core implementation and sustaining activities for the joint information environment (JIE) architecture. Enhancements include: the joint DISA/Army effort to consolidate overlapping optical transport networks in Europe; router upgrades to improve diversity and support advanced multi-protocol label switching (MPLS) and IP routing technologies, which will bring the network in line with 100G connectivity; and Internet Access Point (IAP) expansion in CONUS and IAP Router upgrades in OCONUS to improve bandwidth utilization and reduce Internet latency and packet loss. Despite ongoing network expansion, decreased costs for transport services are planned due to continued efforts to eliminate and optimize legacy systems, improve bandwidth utilization, and transition to more cost effective circuit leases.

Voice Services provide day-to-day commercially competitive services plus unique secure

military requirements. Voice Services include operation of the unclassified Defense Switched Network and the classified Defense Red Switch Network. This budget reflects the DoD’s overarching technical strategy and directive to implement technology replacement of legacy systems with IP-converged services. The unclassified legacy service (DSN) will transition the current network infrastructure from a Time Division Multiplexing (TDM) circuit-switched network to an IP-based network by FY 2016.

Video Services provide global unclassified and classified video teleconferencing capabilities for

the DoD and other government agencies. Consistent with the DoD’s Unified Capabilities Master Plan, DISA has partnered with Industry to develop a Global Video Service for over 2.4 million users. This solution provides IM/Chat/presence, collaboration, and peer-to-peer and multi-user conferencing over an IP-based network. DISA began offering the next generation of video teleconferencing services in FY 2014 and will completely eliminate the legacy video service (DVS-G) infrastructure by FY 2016.

Data Services provide Secure Internet Protocol Router Network as well as Non-classified

Internet Protocol Router Network capabilities. Additionally, Data Services includes IP transport for the Defense Intelligence Agency-managed Joint Worldwide Intelligence Communications System by providing comprehensive, worldwide, secure high-speed

multimedia, Top Secret/Sensitive Compartmented Information communications services for the DoD intelligence community and other federal agencies. Data Services also includes DISN Test and Evaluation Network support, which is used by the command, control, intelligence, and mission support communities to conduct development, certification, and operational test and evaluation activities to ensure programs meet network requirements prior to deployment.

The following items describe the activities necessary to maintain the DISN’s operational capability and achieve the high-availability, secure, and robust service that our DoD customers require. Operational Support Services provides the tools necessary to automate the operations,

administration, maintenance, and provisioning/engineering activities for the DISN. These same tools give network managers/monitors the capability to “see” the network in real-time, a critical capability necessary to resolve crisis and other network events. This budget includes the elimination of a number of legacy service management systems by the end of FY 2016 as mission partners are migrated to IP-based technologies.

Mission Assurance activities support the DISN by designing and deploying proactive

protections, deploying attack detection, and performing information assurance operations to ensure that adequate security is provided for information collected, processed, transmitted, stored, or disseminated on the Department of Defense Information Network (DODIN). These efforts include tasks associated with affording protection to telecommunications, information systems, and information technology that process sensitive and classified data as well as efforts to ensure the confidentiality, authenticity, integrity, and availability of the information and the systems. Specifically, this includes activities such as trusted identity and access management infrastructure enabling common access card logon to DoD systems and applications while facilitating secure net-centric information sharing and a host-based security system solution suite of tools allowing prevention, detection, tracking, reporting, and remediation of malicious computer-related activities and incidents across all DoD networks and information systems throughout the DoD Enterprise. This budget includes efforts to streamline and consolidate information assurance contracts in order to deliver savings to DISN customers while maintaining high levels of network security.

Security and Assurance Services enhance the security and availability of the Department of

Defense Information Network (DODIN) by ensuring adherence to Information Assurance and Network Operations policies. Services to be recovered via the DISN share price are network security monitoring and oversight of sensors installed on the DISN backbone and Command Cyber Readiness Inspections. Additional security and assurance services are described in subsequent sections and are provided as separate reimbursable offerings.

Centralized Services are a group of critical mission support activities that support all DISN services. These services are critical in maintaining the DISN’s operational capabilities and achieving the high-availability, secure, and robust services required by DISN

customers. The centralized services support all DISN products and services, and consist of the following groups:

• The Connection Approval Office approves secure interoperable connections in

support of the operating forces and mission partners for applications, information systems and networks authorized to operate on the enterprise infrastructure.

• Customer Support Services operates the DISN Customer Call Center, located at Columbus, Ohio, to respond to customer incidents and connection issues 24 hours per day, 365 days per year.

• The DISA Theater Network Operations Centers monitors and reacts to real-time network traffic and events. The Theater Network Operations Centers and Field Commands are located in the Continental United States, Southwest Asia, Pacific, and Europe and are staffed 24 hours per day, 365 days per year.

As previously discussed, DISN services are bundled together and sold on a subscription package basis. The Department of Defense uses the matrix shown below to distribute costs to users based on two factors; the services they receive and the bandwidth DISA is required to provision in order to deliver those services. Each DISN site is assigned a number of shares based on the matrix, which combined with the per-share price, determines the total annual “subscription” for the military departments/agencies. The DISA updates the DISN site list annually based on input from the DoD components. Bandwidth Size

Subscription Service Package Small ≤DS3

Medium >DS3 to ≤OC3

Large >OC3 to ≤OC12

Mega >OC12

Transport/ISR Only: No DISN Services 1 1 1 1

Num

ber

of S

hare

s

Mission Essential: Any of the following - SIPRNet, NIPRNet, Unclassified Voice, Video Services

1 2 6 8


2 8 24 36

C2 Plus: C2 with Joint Worldwide Intelligence Communications System or Classified Voice

5 10 30 40


8 16 48 72